Blockchain payments firm Ripple published a 23-page white paper on December 14 praising central bank digital currencies (CBDCs) and their potential to expand financial inclusion worldwide.
The report explains what CBDCs are, their use, and the barriers inhibiting mainstream adoption. Ripple contends CBDCs can broaden access to financial services, smooth cross-border payments, and bolster central banks’ control over monetary policy. The company also argues CBDCs are essential for unlocking the full possibilities of asset tokenization.
Ripple says CBDCs are important for asset tokenization
“CBDCs are needed to support the most significant positive impacts of asset tokenization, an increasingly targeted mechanism for transforming tangible assets into digital tokens stored on the blockchain,” the white paper states.
However, Ripple acknowledges CBDCs still face obstacles preventing widespread rollout and acceptance globally. These roadblocks include a lack of regulatory clarity, minimal consumer awareness and education, privacy and security fears, insufficient digital ID verification methods, interoperability challenges between different CBDCs, and the inability to transact offline.
Despite the obstacles, Ripple believes that through continued technological innovation and collaboration, these issues can be addressed over time. The company touts its expanding role in partnering with central banks worldwide to develop CBDCs.
Ripple is actively engaged with central banks in Bhutan, Palau, Montenegro, Colombia, and Hong Kong on various CBDC projects. It also collaborates more broadly with over 20 central banks globally on researching and building CBDCs.
Given the momentum behind CBDCs and the investment pouring into the space, Ripple forecasts over $5 trillion worth of the digital currencies circulating through major economies within the next decade. In addition, the report concludes that CBDCs hold exciting promise to profoundly reshape finance and payments in the coming years.