Bhutan’s central bank, the Royal Monetary Authority (RMA), has partnered with Ripple to start testing a prototype of its central bank digital currency (CBDC) using Ripple technology. The test will use Ripple’s private ledger of the CBDC, to support similar use cases. The beta testing will include retail, cross-border and wholesale payments of the proposed central bank digital currencies.
Bhutan Ripple participates in beta testing of CBDC
Bhutan, a small country located in South Asia, is working on issuing a central bank digital currency from its fiat currency, known as Ngultrum. The country will partner with Ripple, the cryptocurrency and payments company, to beta test the digital currency in different use cases. The Royal Monetary Authority (RMA), the central bank of Bhutan, will use Ripple’s technology to conduct the tests.
This pilot provides another example of a country approaching the realm of digital currency as a way to improve citizens’ access to financial services. In this regard, Bhutan expects these measures to increase the access of its nationality to the financial market by 85% by 2023.
Yangchen Tshogyel, deputy governor of the Royal Monetary Authority of Bhutan, stated that they chose Ripple because it could allow them to use their existing infrastructure. Chugel said:
Ripple’s groundbreaking technology will allow CBDCs to be piloted with existing payments infrastructure – while ensuring efficient and cost-effective cross-border transfers.
Ripple and CBDCs
While Ripple has been touted as the go-to platform for bank-related remittances and apps – and even as a SWIFT alternative of sorts – this is the first time it has participated in a CBDC test. However, this test does not use Ripple’s public ledger. The test takes advantage of another Ripple technology called a private ledger CBDC, which the company introduced in March.
The private ledger is powered by Ripple’s proprietary consensus, which is based on proof of stake and, according to the company, supports tens of thousands of operations per second at negligible fees, which is suitable for massive payments. James Wallis, Vice President of Central Bank Transactions at Ripple, said:
We couldn’t be happier to partner with RMA on its CBDC agenda and advance our shared values in creating a more sustainable, accessible and financially inclusive reality.
Bhutan is now joining other geopolitical regions such as China and the European Union in actively searching for central bank digital currencies for implementation.
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