Ripple issues white paper on CBDCs, reiterates belief in their potential

Ripple has doubled down on its public support for central bank digital currencies (CBDCs) in a new white paper. The 23-page document was released by the blockchain-based digital payments company on Dec. 14.

In the document, Ripple explains the basics of CBDCs, their attractiveness, risks and barriers to widespread adoption. The white paper claims CBDCs help expand financial inclusion, streamlining cross-border payments and reinforcing monetary policy control. It also states:

“CBDCs are needed to support the most significant positive impacts of asset tokenization, an increasingly targeted mechanism for transforming tangible assets into digital tokens stored on the blockchain.”

Among the barriers to adoption, Ripple highlights the absence of a uniform, global regulatory framework for CBDCs. Other factors include a lack of end-user adoption, “little-to-no” consumer education, fears about privacy and security protections, digital identity verification, lack of interoperability among CBDCs and offline access to transactions. However, the authors of the white paper believe these issues “aren’t unsolvable.”

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The company cites its role in developing CBDCs around the globe. Ripple is actively engaged in CBDC collaborations in Bhutan, Palau, Montenegro, Colombia and Hong Kong, as well as working in partnership with more than 20 central banks globally on CBDC initiatives.

The white paper concludes that CBDCs have exciting potential, with a predicted $5 trillion circulating throughout major economies over the next decade.

In November, Ripple vice president James Wallis expressed the same optimism for central bank engagements. Wallis contended that CBDCs provide a cost-effective solution by enabling financial services at a significantly lower cost than traditional methods. He added that CBDCs offer streamlined payment options and chances to establish credit, even without previous ties to financial institutions.

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