A report commissioned by CPA Australia delves into the status of central bank digital currency (CBDC) development worldwide, while exploring viable blockchain candidates for hosting CBDCs in the coming years. The report offers up evaluations of the three most transacted cryptocurrencies in Bitcoin, Ethereum and XRP, and analyses their suitability (or lack thereof) as CBDC platforms.
However, nothing in the main body of this CoinTelegraph article supports the claim in its title that “only one of Bitcoin, Ethereum or XRP can do it”! The actual CPA Australia report was merely using those three platforms as examples, along with stablecoins. From the paper:
While it is not feasible to present a comprehensive discussion of all the cryptocurrencies, the following provides a review of the three most-transacted digital currencies – Bitcoin, Ether and XRP.
And this Finance Magnates article claims that “the Banque de France has reportedly discussed XRP and Ripple for the launch of a central bank digital currency (CBDC). The central bank is planning to prefer XRP over Bitcoin and Ethereum.” This is presumably based on the CPA Australia’s report’s claim that “France’s central bank, Banque de France, has openly discussed Ripple/XRP as a possible platform for Europe’s central digital currency.”
However, none of the Banque de France references in the paper support the claim that “the central bank is planning to prefer XRP.” This is the reference (from early 2020) to Ripple (and Ethereum) in the first-reference:
Since the attributes of a unit of the wholesale CBDC (file representing the currency unit, keys enabling use) may be integrated in a crypto-asset circulating on another blockchain, which is possible on Ethereum and Ripple, for example, it would then become possible to use the unit on this blockchain.
And there’s nothing about Ripple or XRP in this July 15, 2020 Banque de France press release:
Following the examination of the applications received on 15 May in response to [its] call for applications to experiment the use of central bank digital currency for interbank settlements, the following 8 applications were selected (in alphabetical order): Accenture, Euroclear, HSBC, Iznes, LiquidShare, ProsperUS, Seba Bank, and Société Générale – Forge.
And by January 19, 2021, the Banque de France announced that:
On December 17, 2020, the Banque de France successfully carried out an experiment on central bank digital currency (CBDC) with IZNES as part of the experimental programme launched in 1 March … The experiment was carried out in collaboration with IZNES, SETL, CACEIS, CITIGROUP, GROUPAMA AM, OFI AM and DXC.
Nothing about Ripple or XRP here either, so I don’t know where this impression that the Banque de France is favoring them in their CBDC thinking.
I got myself into some hot water with Twitter’s XRP community with my tweet claiming that Ripple and XRP are “toast” among central banks, thanks to the U.S. Securities and Exchange Commission (SEC) lawsuit launched in December. (The lawsuit alleges that Ripple Labs and two of its executives, raised over $1.3 billion through an unregistered, ongoing digital asset securities offering of XRP.) But central banks are a very reputationally risk averse lot, something I know from 40+ years of experience working for and around them.
I have no opinion on the lawsuit, and have nothing against XRP, but the there is something of a mob mentality among many of Twitter’s XRP aficionados. My interest in XRP relates to its role as a CBDC platform, and besides XRP there seem to be numerous other contenders, but it does seem like there’s a myopia among XRP fans, possibly related to trading profit motives, and that really bugs me.
However, I was out of line when I said that Ripple had “weaseled” itself into the good graces of many central banks and official institutions, when it’s simply that they do a better job of marketing themselves than their competitors (Algorand, Celo, eCurrency, and Stellar to name a few) except for perhaps Ethereum.
* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.