Politics of Palau takes place in a framework of a presidential representative democratic republic, where by the President of Palau is both head of state and head of government, and Palau currently has no political parties.
Palau uses the U.S. dollar as its currency. This has the advantage of bypassing the expense of running a central bank. Also, the currency is completely convertible, and price stability is reasonably well ensured, as Palau does not have the ability to print currency. The rate of inflation was less than 3 percent a year from 1996-98.
The population of Palau is approximately 21,000, of whom 70% are native Palauans of mixed Melanesian, Micronesian, and Austronesian descent. Many Palauans also have some Asian ancestry, from intermarriage between settlers and Palauans beginning in the 19th and 20th centuries.