Navin Gupta, Ripple’s managing director of South Asia, paid his own remark on those digital currencies that are being built by China, Singapore, Canada and other countries. Gupta said the primary use case of those currencies could be domestic because central banks have not elaborated how a digital currency would be used by citizens in a figured way.
Ripple’s technology highlights
Their technology works like WhatsApp for banks because they communicate the way WhatsApp transfers information. Ripple and other institutions are working like they are changing and bringing the whole humanity that was existed earlier. They are leapfrogging to bring people into this new world compatible to the Internet era. The interledger protocol and ILP create an open standard. Anyone building an open system or a blockchain system today has to comply with the ILP requirements which means tomorrow those blockchains will be interoperable with anything that Ripple is building.
Ripple has a neutral network like anyone can join the network and also can build his own network too. No institution will be threatened by Ripple as they are looking at a B2B model. All transfers will happen in a few seconds except the need of nostro accounts. Ripple offers a real-time settlement system, remittances, and currency exchanges as an open-source protocol and uses cryptocurrency, XRP for transactions. Siam Commercial Bank (SCB) announced its use of Ripple to provide cheaper cross-border transactions to its customer and it is so difficult to send and receive money today.
Competition of digital currency
According to Gupta, central bank digital currencies (CBDCs) would primarily be used domestically. Globally, governments are anticipating the launch of CBDCs to realize strategic and competitive advantages within the global trade system. China tried to internationalize its yuan and China’s CBDC may boost the internationalization of the yuan. Saudi Arabia and the United Arab Emirates announced a cross-border digital currency initiative last year which will be targeted for banks at an experimental phase to facilitate cross-border payments.
Facebook is also walking along the line with its Libra. Singapore and Canada announced successful cross-border payment experiments using CBDCs back in 2019. Libra is really a great threat to other digital currencies. Gupta said they are not looking to either replace domestic currencies, either fiat or digital, but what they are looking at is making the current system far more efficient versus the way it is today.