Ripple, a provider of business blockchains and solutions to facilitate cross-border payments, announced a partnership in Bhutan’s Central Bank, called the Royal Monetary Authority (RMA), to test the use of a central bank cryptocurrency (CBDC) with the Ripple CBDC private Ledger.
In addition to the current payment infrastructure that it has built, the RMA will be able to test wholesale, retail, and cross-border payment applications for the digital Ngultrum with a gradual approach with Ripple’s blockchain technology that is sustainable. Doing this will speed up its goal of increasing the financial inclusion rate in Bhutan to the 85% mark by 2023.
RMA’s determination to develop an efficient and secure payments system has made it an innovator in financial technology. In 2019 the central bank officially launched its Global Interchange for Financial Transactions (GIFT) system that allows the electronic transfer of large amounts and large-scale payments. It is also a complement to the federal government’s Electronic Public Expenditure Management System (e-PEMS) to simplify transactions with the government and banks.
Bhutan is a part of Ripple’s commitment to sustainability and is among the few carbon-negative nations around the globe. The CBDC Private Ledger – based on the open-source, public-facing XRP Ledger — is carbon-neutral and is 120,000x more efficient than blockchains that use proof-of-work. Furthermore, CBDC Private Ledger is carbon-neutral, and 120,000x more efficient than proof CBDC Private Ledger gives central banks such as RMA the security as well as the control and flexibility to implement the CBDC strategy without jeopardizing its financial stability or policies.
Utilizing the Ripple CBDC Private Ledger, central banks will be able to connect to an extensive system made up of CBDC Ledgers that enables full settlement interoperability and the independence of technology and money.
Royal Monetary Authority of Bhutan (RMA) was created in 1982 during session 56 of the National Assembly to take over the management of the country’s currency, the administration of the reserves external to Bhutan, as well as foreign exchange transactions.
The Authority is an official banker of the government, which includes the majority of government deposits and provides financial services through licensing, regulation, and supervision of banks in Bhutan.
The enactment of the RMA Act (2010), the position of the RMA was upgraded to the status of an independent Central Bank with greater powers in regards to its method of operation and its the process of decision-making.
Gargi Sinha is working as Senior Journalist at Confea. She has completed her Masters in Journalism from Delhi University. She has interest in crypto and blockchain technology.