The International Monetary Fund (IMF) has announced the development of a platform for a central bank digital currency (CDBC). Interestingly, the IMF has mentioned Ripple more than once in its reports, including in a report dated March 2023, the company was considered by the IMF as a potential solution to specific problems.
IMF Report Examines Ripple’s Role in Lowering CBDC Costs
IN IMF report Titled “Trust Bridges and Cash Flows: A Digital Marketplace to Improve Cross-border Payments”, the discussion revolves around the potential benefits and risks associated with CDBC. Ripple is explicitly cited as a supposed solution to some of the hurdles central banks face when issuing CDBCs.
One notable area where Ripple’s technology could prove useful is in reducing the costs associated with issuing and maintaining CDBCs. In addition, it can improve the speed and efficiency of cross-border payments.
The report proposes three market models: a privately-owned settlement asset and marketplaces like Ripple’s XRP, an open source market like the Stellar Foundation, or a fiat-based crypto asset market like Strike that uses Bitcoin and Lightning network .
Previous Collaboration: Ripple’s Impact on Financial Technology
The authors of the report emphasize that a public solution similar to Ripple’s approach has clear advantages due to its potential operation as a regulated private entity.
This will solve the problems of coordination associated with centralized participation and provision liquidity while ensuring transparent governance, operational stability and full compliance with financial integrity standards.
The history of cooperation between Ripple Labs and the IMF goes back several years. IN presentations Sagara Sarbhaya on November 2018 revealed that Ripple has been selected for the High Level Financial Technology Advisory Group.
Besides, Chris Larsenthe Executive Chairman of Ripple, is an active member of this group, strengthening Ripple’s involvement and influence in the fintech space.
The potential collaboration between the IMF and Ripple Labs has huge implications for the cryptocurrency industry. If implemented, it could mark an important step towards the mass adoption of digital currencies, as IMF approval will ensure credibility and regulatory support for Ripple technology.