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The Royal Monetary Authority of Bhutan (RMA) has announced that it will be using Ripple’s blockchain technology to run its pilot scheme for a central bank digital currency (CBDC).
The RMA will experiment with retail, cross-border and wholesale payment uses for a digital ngultrum in phases using Ripple’s sustainable blockchain technology, it has announced.
The RMA will conduct this pilot scheme on top of the country’s existing payments infrastructure, its stated aim being to include 85 percent of people in the country in the financial system by 2023.
“Our collaboration with Ripple is testament to the potential of CBDCs to provide an alternative and sustainable digital payment instrument in Bhutan. Ripple’s groundbreaking technology will allow for the experimentation of a CBDC with our existing payments infrastructure — while ensuring efficient and cost-effective cross-border transfers,” said Yangchen Tshogyel, deputy governor of the Royal Monetary Authority of Bhutan.
There is also an environmental angle to the decision to use Ripple. Bhutan is the only carbon negative country in the world at present.
The CBDC Private Ledger that Ripple has created is carbon neutral and, according to the company, more than 1,000 times more efficient than proof-of-work blockchains.
Ripple, a US company, released its real-time gross settlement protocol in 2012. Since then, it has found itself in hot water with the US Securities and Exchange Commission.
In a lawsuit last year, the SEC claimed that XRP, the cryptocurrency that Ripple created, was a security instead of a commodity because Ripple Labs generated and distributed it in a centralised fashion, instead of financial institutions adopting it for its advertised uses.
This case then prompted Coinbase to delist XRP securities.
Coinbase itself has recently faced setbacks due to regulatory intervention. On September 23, it discontinued its Lend scheme, by which it planned to award consumers interest on the crypto-coins that they kept on its platform that they did not wish to trade at any particular moment. This came after the SEC served it with a Wells notice.
