The Ripple CTO, David schwartz, Said that to create liquidity for the various CBDCs that will emerge in the coming years, there would be space for a neutral asset free of jurisdiction which could also interact with other stablecoins and new tokenized asset classes, such as security tokens and DeFi tokens.
I don’t think there’s going to be one world fiat any time soon, so even with stablecoins there will be a lot of them. To make liquidity between CBDCs, other stablecoins, and new tokenized asset classes (securities, DeFi) there’s room for a neutral, jurisdictionless asset.
– David Schwartz (@JoelKatz) October 19, 2020
Too shared Notes from a recent conference in Berkeley where he spoke about Ripple and described it as a way to improve international payments for corporate clients through RippleNet.
During this conference he also spoke about CBDCs, Central Bank Digital Currencies, saying that they could make settlements faster, more reliable and less expensive, noting that international payments today are very inefficient.
Ripple as a solution for CBDCs
According to Schwartz, the biggest obstacle to modern international payments is usually the last step, which is to deliver the funds to the actual recipient through the domestic payment system.
The problem would also arise with CBDCs, as they are almost certainly distributed through the same intermediaries, such as banks, wallets or fintech services, because central banks do not have the real capacity to provide direct services to citizens.
If many countries issue their own CBDCs, interoperability will be required between these virtual currencies and traditional systems, and the solution could be to connect national payment systems in real time, thanks to systems based on common principles, as was the case for the Internet, for example.
To achieve this, according to Schwartz, a neutral intermediate asset that behaves like BTC, ETH or XRP will be necessary, that is, free from the control of a single jurisdiction.
It is worth remembering that Ripple's cryptocurrency, XRP, is now based on a public blockchain, XRP Ledger.
Schwartz obviously proposes that XRP must play this role, thanks to the fact that it is a natively neutral asset, capable of connecting CBDC, stablecoins, other payment networks and other types of assets by issuing assets integrated in the protocol with simple APIs.
To date, XRP is the fourth cryptocurrency by market capitalization, but unlike the top three (BTC, ETH, and USDT), it still doesn't seem to have found a specific role to play in the cryptocurrency landscape.
It is less volatile than BTC and ETH, but certainly more than USDT, although on the other hand it also has the merit of being the native cryptocurrency of its protocol, while USDT is a token that runs mainly on Ethereum.
However, a problem could come from regulations in the US, the country where Ripple is located, so much so that CEO Brad Garlinghouse has considered move it to Asia, particularly to Singapore or Japan, or alternatively to Switzerland, the United Kingdom or the United Arab Emirates. countries where there is already clear regulation of digital assets.
The desire to operate with the traditional banking system places Ripple in the position of needing to be able to move in full compliance with regulations, and given the prospects envisioned by Schwartz with central bank digital currencies, this need would be even more urgent.
At this point, it is possible that in the next few months Ripple and XRP may announce new developments related to their relationship with the institutional financial system, while Bitcoin and Ethereum can follow different paths.