Ripple and its cross-border revolution

Ripple burst into the financial sector, promising disruption of cross-border payments. For years they have made steps toward realizing that goal, but its so-called “disruption” of the market is still in the air. 

With increasing solutions aimed at the cross-border space that don’t use blockchain, it seemed Ripple was fading somewhat into the background. Overshadowed by a seemingly endless battle with the SEC, headlines on the company have shifted from its cross-border promise to crypto-heavy regulatory discussions, leaving many in the finance industry wondering, ‘What happened?’.

However, a recent announcement that the company is launching a “frictionless end-to-end” platform for governments to approach CBDCs proves that active engagement in cross-border payments is still underway. It is reported that the solution can “holistically manage and customize the entire life cycle of fiat-based central bank digital currency, transaction and distribution.”

Perhaps the cross-border revolution powered by XRPL is right on track. 

Ongoing innovation in Cross Border payments

 “In the future, I think people see a world where crypto and CBDC networks will integrate. The CBDC will be one proponent that users can connect to,” said Emi Yoshikawa, VP, Strategy & Operations at Ripple.

Emi Yoshikawa, VP, Strategy & Operations at Ripple
Emi Yoshikawa, VP, Strategy & Operations at Ripple

“For (the CBDC solution), we use a private version of the XRP ledger. The XRP ledger is an open-source level one blockchain, and we created a private version and built a tokenization capability leveraging interconnectivity. And this is because we really believe in interoperability between CBDCs and other networks.”

CBDCs are one of many solutions global entities are addressing cross-border payments. 

The sector has been plagued with slow and costly settlement, with weaknesses that security can be breached. With many nations enjoying innovation in domestic real-time payments, attention turned towards cross-border transactions to do the same.

In 2020, G20 focused on cross-border payments, endorsing a roadmap formulated by the FSB to improve speed, transparency, and cost. The FSB has since developed a further-reaching plan to implement practical projects to achieve its goals. While much of the plan focused on the communication and legal standards between banks, API harmonization, and interoperability were also significant factors. 

The long-standing inter-bank messaging network, SWIFT, has undergone several innovations in line with this. Aiming to improve levels of funds’ tracking, transparency of fees, and ultimately, payment speed, SWIFT GPI and SWIFT Go rose in direct competition with the benefits posed by Ripple’s DLT solution. 

Many believe the move to be in response to Ripple’s innovation. 

However, many still believe Ripple’s position on the blockchain to be a significant advantage, particularly as CBDCs become a reality. 


Ripple in the brave new world of digital currency and CBDCs

While Ripple has focused on interoperability within their CBDC solution, the use of its native XRP coin is negligible. In the initial release of the solution, the company said the coin could be leveraged as a “neutral bridge asset for frictionless value movement between CBDCs and other currencies,” however, it will not be intrinsic to the use and production of CBDCs on the platform.

Focusing instead on the needs of the entities issuing and using the CBDCs, the company has stated that the new platform will further develop the use cases of fiat-backed digital currency. 

In announcing the platform launch, the company highlighted its collaboration with entities worldwide, which informed the platform’s capabilities. Customized to users’ needs, the platform allows entities to issue currency, operate movements, and produce wallets. The Ledger forms a significant part of the platform, enabling entities to leverage the programmability of digital currencies and innovate while recording settlement.

“With more than 20 governments and central banks talking to Ripple about CBDC projects, today’s announcement of the enhancements to the CBDC Platform is well positioned to deliver more innovation, adoption, and transformative use cases in countries around the world,” Steven Dickens, VP and Practice Lead, Futurum Research.

A recent acquisition of Swiss custody provider, Metaco could also feed into the platform’s capabilities.

 “Bringing on Metaco is monumental for our growing product suite and expanding global footprint,” said Ripple’s CEO, Brad Garlinghouse. 

“Custody is a key facet of the infrastructure required for enterprise crypto services,” said Monica Long, President at Ripple. “Adding these capabilities to Ripple’s already growing product solutions means we can continue to support customers as they utilize crypto and blockchain for real-world use cases across all phases of adoption.”

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  • Isabelle Castro Margaroli

    Isabelle is a journalist for Fintech Nexus News and leads the Fintech Coffee Break podcast.

    Isabelle's interest in fintech comes from a yearning to understand society's rapid digitalization and its potential, a topic she has often addressed during her academic pursuits and journalistic career.