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The move is driven by Bhutan’s desire to enhance digital and cross-border payments.
September 24, 2021 at 11:00 am UTC · 2 min read
Bhutan’s central bank, the Royal Monetary Authority (RMA), has partnered with Ripple to use its infrastructure to pilot a central bank digital currency.
According to an announcement from Ripple, the move is set to expand the country’s financial inclusion efforts and extend its commitment to sustainability as it aims to become the only carbon-negative country in the world.
🇧🇹 Announcing our partnership with the Royal Monetary Authority of Bhutan, which will use Ripple’s CBDC solution to pilot a digital Ngultrum!
Read more: https://t.co/iARAb39JAZ
— Ripple (@Ripple) September 22, 2021
The Kingdom of Bhutan to explore launching a CBDC through Ripple
The RMA is set to use Ripple’s CBDC Private Ledger to launch a digital Ngultrum (BTN) in phases. The phased launch will help Bhutan accelerate its mission to increase financial inclusion in the country to 85% by 2023. Using the Private Ledger will also enable the RMA to access a network of other CBDC Ledgers that will provide full settlement interoperability with other central bank digital currencies.
This isn’t the first time Bhutan made the news for digital innovation. In 2019, the RMA launched the Global Interchange for Financial Transactions (GIFT) system which enables electronic transfers of large value and bulk payments. The system was designed to complement e-PEMS, the government’s expenditure management system, and streamline transactions between the government and banking systems in the country.
“We couldn’t be more thrilled to partner with the RMA on its CBDC agenda and foster our shared values in creating a more sustainable, accessible, and financially inclusive reality,” said James Wallis, the VP of Central Bank Engagements at Ripple.
Wallis explained that Ripple’s solution will offer the RMA greater control over issuance, management, privacy, and validation than it would get with public blockchains. Aside from privacy, the CBDC solution will also provide the RMA with a network that can handle payments at the volume required to make the digital Ngultrum a viable payment method.
“Our collaboration with Ripple is testament to the potential of CBDCs to provide an alternative and sustainable digital payment instrument in Bhutan,” said Yangchen Tshogyel, the deputy governor of the Royal Monetary Authority of 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.”
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