Announcement has been made by the Royal Monetary Authority of Bhutan regarding its partnership with Ripple to pilot a central bank digital currency (CBDC) using Ripple's private ledger.
The Royal Monetary Authority (RMA) of Bhutan, the kingdom’s central bank, recently announced a partnership with Ripple, a leading provider of enterprise blockchain solutions for payments. The collaboration aims to launch a new pilot project for a central bank digital currency (CBDC) utilizing Ripple’s private ledger. This undertaking is part of Bhutan’s broader strategy to transition to a digital economy.
Embracing Digital Transformation
The initiative is part of Bhutan’s ambitious plan known as the Digital Ngultrum, designed to implement a CBDC that will allow the central bank to deploy a cost-efficient, transparent, and highly secure digital currency. The RMA aims to improve financial inclusion and foster efficient, instant cross-border transactions.
The CBDC will be piloted on Ripple’s CBDC Private Ledger, a technology built upon the same blockchain infrastructure that powers the XRP Ledger (XRPL). This technology offers central banks a secure, controlled, and flexible solution for the issuance and management of digital currencies.
Related: The Evolution and Impact of Central Bank Digital Currencies (CBDCs) in 2024
Ripple’s CBDC Private Ledger
Ripple’s CBDC Private Ledger is designed to handle the high volume of transactions required by a CBDC efficiently. It can process tens of thousands of transactions per second, which scales to hundreds of thousands of transactions per second. Furthermore, it consumes a fraction of the energy used by public blockchains, contributing to sustainable and cost-effective operations.
Bhutan’s Bearing Towards Digital Currency
Related: Consultative Group Under BIS Suggests Retail CBDC Structure
Bhutan’s move towards digital currency is part of its broader strategy known as the Digital Drukyul, a five-year plan that aims to transform Bhutan into a digital society. The plan includes improving digital literacy, enhancing connectivity, and fostering an ecosystem for digital businesses.
As part of this plan, Bhutan has also partnered with the Asian Development Bank to develop the Gelephu Hub, a strategic reserve that will store digital assets like Bitcoin, Ether, and Binance Coin (BNB). This partnership will allow Bhutan to grow its digital economy by attracting high-tech businesses and fostering innovation.
The Rise of CBDCs Worldwide
Worldwide, more and more countries are exploring the potential of CBDCs. China is already trialing its Digital Yuan, while the European Central Bank is studying the feasibility of a Digital Euro. The Bank of England and the Federal Reserve in the United States are also researching the possibility of introducing their respective CBDCs.
Related: Global market changes in crypto, betting, and CBDCs
These developments indicate a growing acceptance of digital currencies as a means of exchange, store of value, and unit of account. CBDCs, in particular, can offer benefits in terms of efficiency, security, and financial inclusion.
Conclusion
The partnership between the Royal Monetary Authority of Bhutan and Ripple marks a significant step towards the realization of Bhutan’s digital transformation strategy. The success of the CBDC pilot could potentially influence other countries to follow suit and adopt digital currencies as part of their financial systems. It also highlights the key role of blockchain technology in shaping the future of money and finance.
