Bhutan’s Royal Monetary Authority aims to create its own state-issued CBDC with its latest partnership.
Bhutan’s Royal Monetary Authority has partnered with enterprise payments network Ripple to create a central bank digital currency (CBDC).
To boost financial inclusion and digital payments, Bhutan’s central bank is looking to build on its current payments infrastructure, and develop retail, cross-border and wholesale payment use cases for a digital Ngultrum using Ripple’s sustainable blockchain technology. With this project, it aims to reach financial inclusion in Bhutan to 85% by 2023.
CBDC is a virtual asset of bank-issued fiat money. Instead of a decentralised asset as seen with cryptocurrencies like Bitcoin and Ethereum, CBDCs are centralised digital assets that are wholly issued and controlled by national banks.
In its press release, the RMA states that the partnership arose due to “the need to adapt to the overall digital transformation in the way we live, interact and transact with each other. Since cash is the only form of central bank money available to the general public, retail CBDCs provide a digital alternative to the public in the face of declining usage and acceptance of cash.”
A survey by the Official Monetary and Financial Institutions Forum (OMFIF) on central banks and financial regulators in APAC states that 90% of respondents believe digital payments will be the core competency in extending financial inclusion.
This is exemplified through APAC’s success with CBDCs in China, Singapore and Thailand. Following this, with Ripple’s CBDC Private Ledger, the RMA will be able to access a network of CBDC Ledgers that enables full settlement interoperability, while ensuring monetary and technological independence.