The XRP coin issuer is launching a revolutionary solution. It is a platform dedicated to governments, central banks, and financial institutions. The goal is to facilitate the creation of their own digital currencies.
Ripple dominates the CBDC market
CBDC is a hot topic that is currently heating up discussions. Unlike cryptocurrencies such as Bitcoin or Ethereum, CBDCs are controlled and managed by a centralized government entity. So far, only 11 countries have introduced central bank digital currencies, but many others have long been exploring and testing the solution.
The company that dominates the CBDC market is, of course, Ripple, which has burst onto the scene with its new platform for creating blockchain-based digital currencies. With Ripple’s platform, every stage of a CBDC’s life – from launch to withdrawal – can be controlled and adjusted. The platform will also allow institutions to handle inter-institutional clearing and distribution functions.
Ripple uses the powerful blockchain technology made famous by XRP Ledger, offering government institutions a way to increase financial inclusion and reduce the risks associated with domestic and international payments.
Hong Kong to take part in CBDC pilot project from Ripple
Ripple said tokenization can reduce resistance in the capital release process and speed up throughput for banks. The company is actively participating in the so-called “second phase” of the program, which is “looking in-depth at use cases, as well as issues related to the implementation, deployment and design of e-HKD,” the HKMA reported.
The pilot project will be based on the new Ripple CBDC platform, offering enhanced functionality, including offline transactions and support for devices other than smartphones.
As Ripple representatives add:
“All partnerships in Ripple’s previously announced pilot programs, including Montenegro, Palau and Bhutan, will use the CBDC platform.”
Hong Kong began exploring CBDC in 2017. The HKMA recently summarized that while e-CBDCs may not have an immediate impact on the current retail payments market, potential e-CBDC use cases could quickly emerge.
CBDC free of XRP?
As the price of XRP increased after the announcements, market participants began to ask whether the use of the new CBDC platform from Ripple forces institutions to also use the XRP coin itself. The matter was clarified by the Silicon Valley company’s CTO, David Schwartz, saying:
“It’s important not to discourage people from adopting the product by requiring mandatory use of XRP, unless it’s for XRPL-specific functions.”
This approach, therefore, does not force any additional actions on program participants. In doing so, it reduces any potential reluctance to use XRP itself, and consequently increases the product’s potential customer base.