Bhutan’s Royal Monetary Authority partners with Ripple to pilot a central bank digital currency in the mountainous kingdom.
In an announcement on Wednesday, Ripple Labs said the central bank of Bhutan would take advantage of the company’s private ledger to issue and manage a digital ngultrum. According to Ripple, the move was prompted by efforts by the Royal Monetary Authority, or RMA, to improve cross-border payments, expand financial inclusion for its residents, and “expand its commitment to sustainability as the only country to negative carbon emission to the world. “
With a population of around 800,000, Bhutan’s gross domestic product stood at $ 2.5 billion in 2020. Although many media outlets speak of the country’s “gross national happiness” as an alternative to traditional finance, thousands of Bhutanese citizens do not have access to a savings account. RMA said it plans to increase financial inclusion in the country by 85% by 2023 by making payments with central bank digital currency, or CBDC, “easier, faster and more affordable.” .
“Beyond privacy, the CBDC solution is also tailor-made to handle payments at the transaction volume required by a successful retail CBDC,” said Ripple. “This gives central banks like the RMA 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 announced it would pilot a private version of the XRP Ledger to provide central banks with a solution to launch a CBDC. Bhutan is one of the first countries to avail of this service.
Related: Ghana gears up for central bank digital currency pilot
Other CBDC pilots across the world continue, with Indian officials hinting that they will start rolling out a digital rupee in December, and Nigeria’s central bank plans to launch a digital currency by 2022. However, China has apparently led the pack, having started testing his yuan in April 2020.