Bhutan, a Buddhist kingdom on the Himalayas’ eastern edge, known for its monasteries, fortresses and dramatic landscapes, is partnering with Ripple to pilot a central bank digital currency in the South Asian country.
According to the partnership, the Bhutan central bank will use Ripple’s CBDC solution to enhance financial inclusion and sustainability.
The announcement stated, “Today, we are proud to announce our partnership with Bhutan’s central bank, the Royal Monetary Authority (RMA), who will use Ripple’s CBDC solution to pilot a central bank digital currency (CBDC) in phases. This move is driven by the nation’s desire to enhance digital and cross-border payments, expand financial inclusion efforts and extend its commitment to sustainability as the only carbon-negative country in the world.”
Ripple Labs, in an announcement, stated that Bhutan’s central bank, the Royal Monetary Authority of Bhutan (RMA), would be taking advantage of the company’s private ledger to issue and manage a digital ngultrum (the native currency of the people of Bhutan).
The announcement also stated that the move was motivated by the Royal Monetary Authority’s effort to improve cross-border payments, expand financial inclusion for its residents and “extend its commitment to sustainability as the only carbon-negative country in the world.”
According to the world bank, Bhutan has a population of approximately 763,000 and a gross domestic product (GDP) amounting to $2.5 billion in 2020. Just like El Salvador, the country faces the problem of financial inclusion. According to reports, thousands of Bhutanese citizens do not have access to a savings account or credit card. The RMA stated that it plans to increase financial inclusion in the country by 85% by 2023 by making payments with a central bank digital currency, or CBDC, “easier, faster and more affordable.”
Speaking on private ledgers for central banks, Ripple stated, “Beyond privacy, the CBDC solution is also custom designed to handle payments at the volume of transactions required by a successful retail CBDC. This provides central banks like the RMA with the security, control and flexibility they need to deploy a CBDC without compromising financial stability or monetary policy objectives.”
The announcement comes more than six months after Ripple said it would be piloting a private version of the XRP Ledger to provide central banks a solution to launch a CBDC. Bhutan is one of the first countries to avail itself of this service.
What you should know
- Other CBDC’s around the world are launching their pilot programs soon. For example, Nigeria will be launching a pilot program for its CBDC on the 1st of October 2021.
- Asides from Nigeria, Indian officials are hinting they will begin rolling out a digital rupee in December. China has seemingly led the pack, having started trials of its digital yuan since April 2020.
- XRP, the native token of Ripple, is currently trading 99 cents, up over 5% for the day.