The Central Bank of Bhutan will use Ripple’s CBDC solution to issue and manage its digital currency. The technology behind this solution not only has financial and functional benefits, but also aligns with the country’s carbon neutrality goals.
Bhutan’s central bank sets its sights on Ripple’s CBDC solution
On September 22, 2021, Ripple announced in a press release that it has partnered with Bhutan’s central bank, the Royal Monetary Authority (RMA). The latter will use Ripple’s CBDC solution based on a private version of the public XRP Ledger, to launch the digital ngultrum.
This CBDC solution from Ripple should thus allow the central bank of Bhutan “to have better control over issuance, management, privacy and validation than with public blockchains.”
Through this project, the RMA wants to improve the efficiency of retail and wholesale payments, as well as cross-border transfers. This initiative is also a way for it to achieve its goal of increasing financial inclusion by 85% by 2023.
Ripple and the digital ngultrum: sustainability and interoperability goals
While the choice of Ripple’s CBDC solution can be explained in particular by the speed of the XRP Ledger, and its advantages in terms of cost and innovation, the RMA was also interested in Ripple’s technology due to the fact that it is carbon neutral. Bhutan is one of the few countries in the world with a negative carbon footprint. The partnership with Ripple also has a sustainability objective. The XRP Ledger is 120,000 times more energy efficient than proof-of-work blockchains.
Ripple also highlights in its release the benefits combining independence and interoperability for digital ngultrum with other central bank digital currencies over the long term by opting for its CBDC solution:
“In addition, this solution will allow the RMA to eventually access a CBDC ledger network for full settlement interoperability, while maintaining its monetary and technological independence.”
Ripple had announced in March 2021, the implementation of its CBDC Private Ledger. Through this partnership with the RMA, it concretizes its desire to provide a turnkey solution to central banks wishing to launch their own digital currency. Its legal battle with the SEC and the fact that it is a private company, did not deter the central bank of Bhutan from relying on Ripple’s technology.