The first phase of the Palau Stablecoin (PSC) Program has been declared a success by the country’s Ministry of Finance. More work on the United States dollar-pegged national stablecoin is planned, with the goal of introducing the PSC on a national scale, according to a report released on Dec. 7.

The three-month PSC project was carried out with the participation of Ripple and used the XRP Ledger central bank digital currency (CBDC) platform. The Finance Ministry recruited 168 volunteers from among government employees, who were able to spend 100 PSC at participating local retailers. Both the volunteers and retailers responded positively to their experience using the PSC.

Purchases were made using a phone and a QR code or by manually inputting a wallet address. Only the retailers were able to redeem the PSC for U.S. dollars, which is Palau’s legal currency. The PSC was fully collateralized by $20,000 in “a Tier 1 Federal Deposit Insurance Corporation (FDIC) United States bank.”

Related: Republic of Palau and Cryptic Labs launch digital residency program

Among the benefits of the PSC, the study noted that it will reduce fees associated with financial transactions, reduce the carbon footprint of the country’s money and increase inclusion, since no bank account is needed to use the PSC. Not all the country’s islands have banks. The report stated:

“The Republic of Palau continues to demonstrate its commitment to digital innovation and financial modernization with its Stablecoin program.”

Ministry of Finance Republic of Palau Stablecoin Program: Phase 1 Report” dated December 7, 2023, prepared by The Ministry of Finance and @Ripple Inc.

This report provides an analysis and findings of the Palau #Stablecoin (PSC) Pilot Project Phase 1, a pioneering endeavor in… pic.twitter.com/SLtjYqfbI3

— Jay Hunter Anson (@JHX_1138) December 7, 2023

Future phases of the project should emphasize education and legal and regulatory issues, the report said. Users listed peer-to-peer transfers and remittances as future use cases they would like to see.

Palau, which has a population of around 18,000, began exploring digital currency in 2021. Ripple was involved from the beginning. Ripple introduced its CBDC platform in May. Binance helped Palau implement a digital identification program.

The PSC program got underway in July and ran through September.

Magazine: Why are crypto fans obsessed with micronations and seasteading?