Ripple to Launch Bhutan’s Central Bank Digital Currency Pilot on Its Private XRPL Ledger
Bhutan is the latest country to announce its plans for a central bank digital currency (CBDC) via a partnership with San Francisco-based Ripple Labs. Announced on Wednesday, the partnership will see the country’s central bank carry out trials on Ripple Labs CBDC platform. The test trials aim to “enhance digital and cross-border payments, expand financial inclusion efforts, and extend its commitment to sustainability as the only carbon-negative country” across Asia and the world, the statement reads.
The South-Central Asian state central bank, the Royal Monetary Authority (RMA), will take advantage of the Ripple Labs private ledger to conduct trials on its proposed digital Ngultrum. The CBDC aims to reduce frictions and costs of sending cross-border payments and enhance the overall payment systems across the country.
This will be made possible by Ripple’s CBDC solution, which leverages on a private version of its open-source XRPL Ledger, already in use in over 100 banks. By building its CBDC atop the private XRPL Ledger, RMA aims to increase its control over the issuance, management privacy, and validation of the Ngultrum.
The platform also enhances the payment processes associated with huge transactions, catering to the retail side of its planned CBDC. This allows central banks the freedom to control the monetary policy objectives and maintain financial responsibility across retail without compromising on the security needed to deploy a CBDC.
Notwithstanding, Ripple Labs aims to preserve the carbon-neutral stance that Bhutan pledges. The CBDC solution will remain carbon-neutral and energy-efficient since it is based on the XRP Ledger, which minimizes the energy consumption to a minimum, unlike resorting to a proof-of-work blockchain.
“In addition to the technology, Ripple’s commitment to sustainability was important for Bhutan.” “For a country that has pledged to remain carbon neutral, this combination of innovative finance with sustainability is a natural fit.”
The plans to launch a Bhutan CBDC on Ripple could have been in progress since April. During Ripple’s Swell conference webinar for the Asian-Pacific region in April, Tashi Yezer, senior payments system officer at the Royal Monetary Authority of Bhutan, was present to discuss possible plans to launch a CBDC.
In March this year, Ripple announced its CBDC solution to assist central banks in creating their own digital currencies. The platform is a private version of the public, open-source XRP Ledger that provides Central Banks a secure, controlled, and flexible solution for the issuance and management of digital currencies, the report stated then.
So far, the CBDC solution has been piloted by UAE and Egypt via Dubai’s Lulu Exchange and the National Bank of Egypt who integrated Ripple’s RippleNET to enhance cross-border payments from the United Arab Emirates (UAE) to Egypt.