The Central Bank of Bhutan and the Royal Monetary Authority (RMA) have partnered with Ripple to use Ripple’s technology to test its central bank digital currency (CBDC) model. The test will use Ripple’s own CBDC private ledger to support similar use cases. Pilot testing will include retail, cross-border and wholesale payments for the proposed CBDC.
Bhutan includes Ripple in CBDC pilot test
Bhutan is a small country located in southern Asia and is working to issue its fiat currency central bank digital currency called Ngultrum. The country will collaborate with cryptocurrency and payment company Ripple to conduct pilot tests on digital currencies in different use cases. The Royal Monetary Authority (RMA) of the Central Bank of Bhutan will use Ripple’s technology for testing.
The pilot provides an example of another country using the digital currency world as a way to improve citizens’ access to financial services. In this regard, Bhutan expects that by 2023, these actions will increase its citizens’ access to financial markets by 85%.
Yangchen Tshogyel, deputy director of the Royal Monetary Authority of Bhutan, stated that they chose Ripple because it allows them to use their existing infrastructure. Tshogyel said:
Ripple’s pioneering technology will allow the use of our existing payment infrastructure to experiment with CBDC while ensuring efficient and cost-effective cross-border transfers.
Ripple and CBDC
Although Ripple is touted as the platform of choice for remittance and banking-related applications—even an alternative to SWIFT—this is the first time it has participated in the CBDC test. However, this test did not use Ripple’s public ledger. The test utilizes another Ripple technology called CBDC private ledger that the company launched in March.
The private ledger is supported by Ripple’s own consensus, which is based on proof of equity. According to the company, it supports tens of thousands of operations per second with negligible costs and is suitable for large-scale payment operations. James Wallis, Vice President of Central Banking at Ripple said:
We are very happy to work with RMA on its CBDC agenda and cultivate our shared values to create a more sustainable, accessible and financially inclusive reality.
Bhutan is now working with other geopolitical regions such as China and the European Union to actively study central bank digital currencies for implementation.
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