Ripple executive explained that XRP is not a rival to stablecoins and CBDCs in international settlements.
Ripple’s senior director of global operations Emi Yoshikawa has revealed in an interview that the XRP coin was not designed to compete with Central Bank Digital Currencies (CBDCs) and Stablecoins, rather, it is complimentary. She noted:
“There are various types of crypto assets, but I think that the role of XRP as a bridge asset in international settlement is not a competition with Stablecoin or CBDC, but on the contrary, complementary. We believe that various stable coins and CBDCs will create a synergy by responding to the liquidity problem by bridging independent crypto assets, XRP.”
The need for the clarity must have been fueled based on Tether’s (USDT) stride in unseating XRP as the third-largest cryptocurrency by market capitalization. Although XRP has regained its position, questions about the possibility of the two coins and possible CBDCs like the Chinese digital Yuan being in the competition have lingered to date.
XRP and Stablecoins Are Crucial for Cross-Border Payments
Through Ripple’s flagship settlement product (On-Demand Liquidity), XRP coin has earned its place as an important digital currency in cross border transactions and settlements. As explained by Yoshikawa, the On-Demand Liquidity is a service for procuring cash liquidity through the RippleNet platform.
“Until now, when a financial institution sent money to a foreign country, it was necessary to prepare a Nostro account at the local financial institution and put in a reserve fund (prefunding) in the local currency. This process is costly both in terms of capital efficiency and currency risk, and also places a heavy burden on compliance and operations,” she said.
As the pandemic rages, stablecoins particularly Tether (USDT) which were built to withstand constant extreme volatility also saw increased usage in payments and settlement. The same role stablecoins and XRP are playing in settlements is being threatened by Central Bank Digital Currencies. While none has yet been launched, they are sure to provide a fast and scalable alternative to the traditional fiat currencies they are pegged against
Ripple’s Growth Has Gotten Recognition
As recognized by Inc, a renowned American Business Magazine, Ripple saw about 3,039% growth from 2016 to 2019, earning it a place as the 123rd fastest-growing company in the United States.
Coming with a unique product offering with a growing demand by financial institutions around the world, Ripple has been able to position itself as a key company in the payment settlement ecosystem.
To bolster the position made by Emi Yoshikawa that the XRP coin was not designed to compete with stablecoins and CBDCs, the company’s CTO David Schwartz noted back in June that the company has no plans to create any stablecoin
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.