- Ripple’s CTO predicts the creation of an ecosystem of assets in which XRP and others will be key.
- XRP Ledger and XRP were designed to serve as a jurisdiction-neutral asset.
Central bank digital currencies are taking up much of the attention in crypto space. Representatives from financial institutions around the world have expressed interest in digitizing or tokenizing their currencies. Ripple’s CTO, David Schwartz, has taken a position on the possibility of the emergence of a “global stablecoin” and the role of the digital asset XRP in that context.
The discussion started when a member of the XRP community referred to the roadmap that has been drawn up by the G-20 Financial Stability Board (FSB) to create a regulation on digital assets. In its publication, the FSB highlighted the advantages of digital assets for making faster and cheaper payments. The user believes that there is room for the emergence of a global stablecoin. The Ripple CTO responded as follows:
I don’t think there’s going to be one world fiat any time soon, so even with stablecoins there will be a lot of them. To make liquidity between CBDCs, other stablecoins, and new tokenized asset classes (securities, DeFi) there’s room for a neutral, jurisdictionless asset.
XRP or XLM, which will be the bridge of the world economy?
Continuing the discussion, another community member asked Schwartz if this “neutral and jurisdictionless” asset is XRP or the native digital asset XLM of Stellar Lumens‘ blockchain. Ripple’s CTO responded that there will not be one and noted that Ripple will have to capture its share of the market:
I think lots of digital and fiat assets will compete to play that role and there is room for more than one. I see the dollar’s role as the world’s settlement currency slowly shrinking and international commerce increasing. So we’ll be fighting for a share of a bigger market.
In that sense, there will be benefits for digital assets like XRP or and even the dollar, added Ripple’s CTO. In a speech Schwartz gave to Berkeley University on Oct. 19, XRP and the XRP Ledger were singled out as specifically designed to fulfill the function of being the asset with neutral jurisdiction. The XRP Ledger has the features necessary to make transactions of a native asset, a neutral asset, to issue bridge assets and to work with other payment networks. Schwartz explained:
XRPL has asset issuance built into the protocol – issuance, authorization, payments, settlement, and exchange are all native operations with simple APIs. Issued assets can represent fiat currency, securities, or anything else of fungible value that works like a currency.
The Ripple CTO hopes that the XRP Ledger and XRP Digital Asset can be part of an ecosystem for greater liquidity in the global marketplace. In that regard, he added:
The XRP Ledger can’t handle all the world’s payments, and I’m not proposing a “one network” solution. That’s totally unrealistic. People want different things and have different problems. But XRP can be the hub or backbone that provides the fast international settlement piece. It won’t solve the last mile problem, but will help with interoperability and concentrating liquidity so enterprises don’t have to be keep funds in every payment system.