Ripple Publishes White Paper on CBDCs and Their Utility

Central Bank Digital Currencies (CBDCs) are digitized forms of legal tender or fiat currencies. CBDCs are usually issued and controlled by Central Banks as a programmable form of paper currencies. The adherents of CBDCs talk about their important features such as cross-border payments and monetary policy systems.

There are a number of digital payments firms that are working on various types of CBDC systems. Ripple is also a digital payment services provider that has recently published a White Paper on the matter of Central Bank Digital Currencies.

The document was issued on 14th December by blockchain developers at Ripple Labs listed the basic framework of CBDCs. The analysts talked about various aspects of CBDCs such as associated risks, barriers, and practical utility of the product.

The document also claims that CBDCs promote financial inclusion, make cross-border payments easier, and accelerate monetary policy implementation. Ripple analysts noted that CBDCs play an important role in tokenization of assets.

The firm noted that the digital product is widely used for converting tangible assets into digital tokens that are launched on a blockchain.

Major Obstacles in CBDC Adoption

Ripple Labs report also discussed important factors that are obstacles for CBDCs such as lack of end-user base, lack of consumer education, privacy issues, security vulnerabilities, limited interoperability, offline transaction restrictions, and no uniform international regulatory framework.

The report also talked about various CBDC ventures around the world working alongside states such as Palau, Montenegro, Hong Kong, Colombia and Bhutan. Furthermore, the firm is also working with more than 20 Central Banks on several CBDC projects.

Ripple VP James Wallis shared his optimism concerning about several CBDC projects with Central Banking firms. As per the executive, CBDCs offer a cost-effective method for offering financial services at a lower price in comparison to TradeFi.

He further noted that CBDCs enable streamlined payment methods and generating credit without backlogs from existing financial institutions. Ripple Labs was among the firms that were embroiled in a lawsuit against the SEC for two years before getting a partially favorable ruling.

The firm has since declared its native blockchain as a decentralized entity and is now focusing on CBDC projects with federated agencies.

Ripple Labs’ Stablecoin Project

Ripple Labs launched a USD-backed stablecoin project in Palau.  The project was backed by 168 volunteering participants accounting for $100 retail purchases since its launch 3 months ago.

The Palau Stablecoin (PSC) has been introduced as a successful project by the finance minister of the region. The firm intends to expand the scope of stablecoin aiming for nationalized adoption. Ripple utilized its native CBDC network XRP Ledger to working with Central Bank of Palau to work on PSC stablecoin.

The finance minister recruited 168 volunteers including government officials. Participants were assigned 100 PSC coins to spend on local businesses. The volunteers and retailers participating in the project shared positive feedback regarding the stablecoin.

Participants were able to make transactions using phones and QR codes by manual input of wallet addresses. The report listed various benefits of PSC stablecoin such as transaction fees, decrease in carbon footprint, and financial inclusion.

The participants highlighted features such as peer-to-peer transfers and remittance services for future utility on account of a limited number of regional banks on Palau native Islands.