On May 18, the US-based blockchain firm Ripple revealed plans to launch a new platform for central bank digital currency (CBDC). The team behind the new platform plans to utilize Ripple’s proprietary tools to enable regulatory agencies to develop their digital currency.
In 2021 the blockchain firm launched the Ripple Private Ledger (RPL), which aimed at supporting the government in creating the CBDC. The distinctive features of the private ledger motivated the developers to center the new CBDC platform on the RPL.
Feature of Ripple’s CBDC Platform
At the initial development of RPL, the developers integrated the platform on the XRP ledger (XRPL) to streamline the payment system. An official announcement conveyed by the vice president of Ripple, James Wallis, revealed the new CBDC platform would address the common problems battling most central banks.
He confessed that global regulators developing the CBDC have invested in exploring practical strategies to ease the implementation of the digital currency. In his statement, Wallis confirmed that the new platform would provide groundbreaking solutions for executing local and cross-border payments. As such, the Ripple CBDC platform has utilized emerging technologies to expedite transactions.
This development aims at allowing the user to send and receive their CBDC more effortlessly. Also, the additional features on Ripple’s new platform would address the potential risk associated with digital transactions.
In 2022 the blockchain firm partnered with the Island of Palau to support the country in launching its CBDC. A report from the President of the Republic of Palau, Surangel Whipps Jr, revealed that the partnership with Ripple would support the country in digitizing the existing financial system.
Ripple Contribution in CBDC Development
He applauded Ripple’s contribution to improving financial inclusivity for the unbanked population. President Whipps Jr added that the blockchain firm would support Palau in developing innovative financial tools crucial for improving financial accessibility in the region.
Nonetheless, research conducted by Juniper revealed that Ripple ranks among the leading crypto firms providing suitable CBDC solutions. The Juniper researchers observed that Ripple’s leaderboard positions blockchain as the best tech firm for CBDC development.
Besides improving the crypto transactions, Ripple’s CBDC platform will support the regulatory agencies in developing the digital currency by integrating customization features. The new platform will enable the regulators to explore different growth stages of CBDC.
Initially, the CBDC life cycle comprises four main stages: creation, distribution, redemption, and cancellation from circulation. During the primary development of CBDC, the regulators formulated the specific condition for issuing digital fiat, to stimulate growth of digital currency.
Nevertheless, Ripple’s CBDC platform will support financial providers in monitoring the distribution of digital currency. At the preliminary distribution of CBDC, the financial providers will allow the customer to store their digital assets that can be used later to purchase goods and services.
Global Adoption of CBDC
After examining the CBDC distribution process, Ripple observed that the operation of the new platform corresponds to the existing procedures used by banks and traditional payment platforms.
Per the Atlantic Council report, approximately 11 countries have successfully launched the CBDC. Among the 11 countries, China leads others in developing digital currency. The Atlantic Council report stated that 114 countries which holds 95% of global GDP are at the final stages of launching CBDC.
Additionally, the blockchain firm noted that the new platform would provide a convenient way to complete offline transactions more seamlessly. Based on the announcement, the Ripple team will launch an e-HKD pilot program for the new platform to experiment with its capabilities.
The impending e-HKD trials will resemble a successful pilot test by the Hong Kong Monetary Authority labeled as de facto for its apex bank. In the coming day, the Ripple team will work closely with the Tawain-based bank Fubon to create an innovative tool for tokenizing real estate. The proposed device will ensure fair equity distribution to support the proposed framework for conducting e-HKD pilot tests.
Besides supporting the launch of CBDC, Ripple acquired the Swiss-based crypto custodial Metaco in an attempt to meet the needs of institutional clients. The Ripple team plans to utilize its cash and equity to purchase Metaco at a sale deal of $250 million.