Central banks will play a vital role in the new modern global financial infrastructure that blockchain technologies will undoubtedly support. Central Bank Digital Currencies (CBDCs) are a major development for central banks, enabling government monetary policy to continue in a world of digital assets – for the benefit of billions of people around the world.
In Ripple’s most recent webinar – Bridging the Innovation Gap – industry experts and partners from Ripple University Blockchain Research Initiative (UBRI) and the National University of Singapore (NUS) examine the future of CBDCs and their impact on cross-border payments.
The future of financial infrastructure is global. For a truly global system to work, interoperability is the cornerstone of long-term success and must include connection to existing national systems as well as to other international systems.
“If we look at the big, long-term picture of CBDC, currencies will be digital. This will enable more efficient payment systems, greater financial inclusion and greater utility with new, innovative services. If a central bank does not have a long-term holistic strategy for CBDCs, they risk the future significance and relevance of their currency domestically and internationally, ”explains Ross Edwards, Global Head of Client Solutions at Ripple.
In a recent BIS survey, not surprisingly, central banks rated “improving payment efficiency” as the main motivation for issuing CBDCs. For many businesses and individuals – both domestically and around the world – the ability to make low-cost, real-time global payments is critical to the success of their business or the well-being of families back home.
“When it comes to digitizing global payments and making the process more efficient, blockchain could fundamentally change the emerging markets,” says Daniel Tenengauzer, Managing Director of BNY Mellon, Head of Market Strategy.
However, the adoption of CBDCs in cross-border payments – and beyond – depends on their usability for both consumers and businesses. Innovation will drive utility and therefore uptake, and this innovation will result from collaboration between the public and private sectors.
With the majority of central banks around the world considering this technology, it is imperative that regulators and industry participants work together. Mark McKenzie, SEACEN Center’s Senior Financial Sector Specialist, describes: “CBDC is obviously the taste of 2020 … but first and foremost we need to think about standardization and harmonization of regulations.”
Ripple leverages our experience building our global payments network, RippleNet, and works with regulators and central banks to develop and implement open, interoperable protocols that can be used to support CBDCs.
If you are a bank or financial institution interested in learning more about CBDCs, watch the CBDC webinar or contact us at CBDC@ripple.com.