Central Bank Digital Currencies [CBDC] is a hot topic that has caught the eyes of many across the globe. While several have been speculating the possibilities of CBDC, China has taken lead in developing the latter. Prominent personalities of the crypto-verse have been revealing their stance on the development of CBDC and Ripple’s Brad Garlinghouse is the latest one to join the list.
Importance Of Interoperability
It isn’t news that almost every country is probing the development of CBDC. With China getting ahead in the game, several countries have begun to fear China’s dominance over the global economy. However, Ripple’s CEO, Brad Garlinghouse, and Ripple believe that interoperability would be the deciding factor in the game to attain financial dominance via CBDCs.
Garlinghouse wrote in his tweet,
Over 70% of the central banks around the world are looking at deploying #CBDCs – and one thing that's crystal clear is the importance of interoperability. If you’re not prioritizing this, you’re just rebuilding the same siloed system. https://t.co/AZdS5YBU8K
— Brad Garlinghouse (@bgarlinghouse) September 24, 2020
COVID-19 has evidently pushed the development of digitalization. Despite the fact that every country is looking into developing CBDCs, deploying them would still pose an enormous challenge. In its recently published article, Ripple highlighted how the development of central bank-issued digital currencies would vary with each country. Despite this, we currently exist in an interdependent world, CBDCs cannot be limited to domestic use cases. The article further reads,
“It will be critical to bridge the gaps between the various CBDC initiatives with existing payment systems as well as other digital currencies to ensure they are successful on a global scale.”
Furthermore, Ripple went on to endorse its On-Demand Liquidity service as well as XRP and suggested that the aforementioned could aid the direct exchange of CBDCs. Since other financial institutions will be required to pour in the capital in different markets across the globe, the demand for a prompt exchange would cost more. However, Ripple’s ODL services reportedly address these issues. The post further read,
“RippleNet’s On-Demand Liquidity service allows financial institutions to transact in real-time across multiple global markets using the digital asset XRP and such a solution can also support the direct exchange of CBDCs.”