Ripple points out barriers to the spread of CBDC

11 months ago 47

CBDC report by Ripple

Ripple, which provides the crypto asset (virtual currency) XRP, has released a report on central bank digital currencies (CBDC). It outlines the barriers to adoption and the benefits it could bring to the financial system.

The barriers to widespread adoption of CBDC were explained as follows.

The main limiting factor is the fact that there is no unified global regulatory framework for CBDCs. This means that solution providers like Ripple must also work with each country individually to comply with each country’s CBDC regulations.

Other factors include lack of adoption by end users, little consumer education, privacy and security concerns, lack of interoperability between CBDCs, and issues with offline access to transactions. I mentioned it.

Ripple cites the benefits of CBDC, including financial inclusion, more efficient cross-border payments, and stronger control over monetary policy. He also said that PoS (proof of stake) chains can be selected to reduce environmental impact.

It also points out, citing research by Citigroup, that it is estimated that approximately 711 trillion yen ($5 trillion) worth of CBDC will be in circulation in major economies in various currencies over the next 10 years.

In May, Ripple launched a new platform for CBDC and stablecoin development. We have also prepared a digital wallet for end users.

connection: Ripple launches CBDC and stablecoin platform

Furthermore, Japan’s Ministry of Finance is also proceeding with discussions on the CBDC “digital yen.”

connection: Utilization of tokens and distributed ledger technology also needs to be considered — Ministry of Finance holds expert meeting on “digital yen”

What is CBDC?

Refers to digitized currencies issued by the central banks of each country or region. Abbreviation for “Central Bank Digital Currency.” The major difference from virtual currency is that CBDC is legal tender. While it is expected to reduce costs and improve efficiency in currency management and payments, there are many issues to consider, such as protection of personal information and privacy, security measures, and impact on the financial system.

Virtual currency glossary

Movements regarding CBDC issues

As for international CBDC standards, the seven major countries (G7) announced common principles regarding CBDC in 2021. It sets standards such as “CBDC must not cause damage to existing financial institutions such as banks,” and proposes strict standards regarding privacy, transparency, data protection, etc.

However, this does not prescribe a detailed regulatory framework or technical mechanism.

connection:G7 announces common principles for CBDC (Central Bank Digital Currency)

Privacy concerns are also being debated in the US Congress. Congressman Tom Emmer expresses concern that a CBDC “could give the federal government the ability to monitor and restrict the transactions of citizens” and prevent the digital dollar from being used for public surveillance. submitted a bill.

connection: Bill against CBDC surveillance society approved by U.S. House of Representatives Financial Services Committee

Regarding interoperability, various experiments are being conducted with the participation of private companies. For example, in September, interbank messaging service SWIFT began testing its CBDC interlinking solution with 30 financial institutions, including the Reserve Bank of Australia, Deutsche Bundesbank, and the Hong Kong Monetary Authority.

connection: SWIFT and 30 financial institutions begin CBDC interoperability test