Bhutan’s Royal Monetary Authority is teaming up with Ripple to test its central bank digital currency. Ripple claims its CBDC solution would allow Bhutan’s central bank to deploy a digital ngultrum “without compromising financial stability.
Bhutan’s central bank will use Ripple Labs’ private ledger to issue and administer a digital ngultrum, according to a statement released on Wednesday.
The Royal Monetary Authority, or RMA, was reportedly driven by a desire to improve cross-border payments, boost financial inclusion for its citizens, and “stretch its commitment to sustainability as the world’s only carbon-negative country,” according to Ripple.
Bhutan’s total domestic product was $2.5 billion in 2020, with a population of around 800,000. Thousands of Bhutanese individuals do not have access to a savings account or a credit card, despite several news outlets reporting on the country’s “gross national happiness” as an alternative to traditional finance.
The RMA claims that by making payments with a central bank digital currency, or CBDC, “easier, faster, and more inexpensive,” it expects to improve financial inclusion in the country by 85 percent by 2023.
“In addition to privacy, the CBDC solution is specially engineered to handle payments at the number of transactions necessary by a successful retail CBDC,” Ripple explained.
“This gives central banks like the RMA the protection, control, and flexibility they need to implement a CBDC without jeopardizing financial stability or monetary policy goals.”
More than six months ago, Ripple announced that it will be piloting a private version of the XRP Ledger to give central banks a way to create a CBDC. Bhutan is among the first countries to take advantage of this service.
Other CBDC trials are continuing around the world, with Indian officials indicating that a digital rupee may be launched in December and Nigeria’s central bank preparing to establish a digital currency by 2022.
China, on the other hand, appears to be ahead of the race, having begun trials of its digital yuan in April 2020.
