Bhutan Embarks on Central Bank Digital Currency Pilot Scheme Using Ripple’s Blockchain Technology

The Royal Monetary Authority of Bhutan has announced plans to utilize Ripple’s blockchain technology for its pilot scheme of a central bank digital currency (CBDC), aiming to explore retail, cross-border, and wholesale payment uses for a digital ngultrum in phases.

Financial Inclusion Goals

By 2023, the Royal Monetary Authority of Bhutan seeks to increase financial inclusion by bringing 85 percent of its population into the financial system. Deputy Governor Yangchen Tshogyel hailed the collaboration as a testament to the potential of CBDCs to provide an alternative and sustainable digital payment instrument.

Environmental Benefits

The decision to use Ripple’s blockchain technology has significant environmental implications. Bhutan is the only carbon-negative country in the world, and Ripple’s CBDC Private Ledger is carbon neutral, boasting efficiency more than 1,000 times greater than proof-of-work blockchains.

Ripple’s Background

Ripple, a US-based company, released its real-time gross settlement protocol in 2012. However, the company has faced regulatory hurdles, including a recent lawsuit from the US Securities and Exchange Commission (SEC) claiming that XRP, the cryptocurrency created by Ripple, is a security rather than a commodity due to centralised generation and distribution.

Regulatory Challenges

Coinbase, another major player in the cryptocurrency space, recently faced setbacks following regulatory intervention. The company discontinued its Lend scheme after receiving a Wells notice from the SEC. As Bhutan forges ahead with its CBDC pilot, the country’s financial sector is poised to undergo significant changes.

Conclusion

Bhutan’s decision to use Ripple’s blockchain technology for its CBDC pilot marks an exciting step forward in the exploration of digital currencies. With its focus on financial inclusion and environmental sustainability, this project has the potential to make a positive impact on the country’s economy and reduce carbon emissions.