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CPA Australia Report: Ripple and XRP ‘Enjoy the Trust of Many Banks as a Model for CBDCs’

CPA Australia Report: Ripple and XRP ‘Enjoy the Trust of Many Banks as a Model for CBDCs’


A recent 47-page report—titled “Central Bank Digital Currencies (CBDCs): A Comparative Review”—prepared for professional accounting body CPA Australia by RMIT University “provides a review of the three most-transacted digital currencies – Bitcoin, Ether and XRP.”

The report looks at several definitions of CBDCs. Here is one of them:

… possibly issued on a blockchain platform, would be a digital version of money which is a liability of the central bank rather than a commercial bank. Similar to cash and commercial bank deposits, a CBDC would be denominated in the sovereign currency and convertible at par with other forms of money.

With regard to Bitcoin, it says:

Bitcoin’s price has been subject to spectacular volatility in recent years and this volatility has resulted in a lack of confidence in Bitcoin as a medium of exchange or as a store of value and raised concerns among central banks as to the viability of cryptocurrencies as CBDCs.

As for Ethereum, it says:

An important distinguishing feature of Ethereum platform compared to the Bitcoin blockchain is that it allows for the operation of smart contracts, and therefore programmable money and payments.

And with regard to XRP, this is what it has to say:

Ripple and XRP enjoy the trust of many banks as a model for CBDCs because it is highly centralised and is based on a permissioned network where only certain network nodes can validate transactions, as opposed to decentralised and permissionless Bitcoin and Ether… Ripple also allows the creation of new currencies and Ripple developers can decide the timing and quantity of supply in a similar way to current central bank operations.

It then goes to mention this very interesting bit of information:

France’s central bank, Banque de France, has openly discussed Ripple/XRP as a possible platform for Europe’s central digital currency.




Earlier this month, FinTech firm Ripple said that it is “piloting” a private version of the open-source public XRP Ledger (XRPL) to allow central banks to create and manage their own digital currencies.

In a blog post published on March 3, Ripple said that more than 80% of the world’s central banks are “actively exploring some form of sovereign-backed cryptocurrency”, and that eventually there would be a wide range of central bank digitial currencies (CBDCs).

Ripple pointed out that existing public blockchains cannot meed the needs of CBDCs since “a Central Bank requires more transaction privacy and control over its currency than a public ledger can offer,” which means that it is “most likely opt to create a CBDC on a private ledger that can also operate at the required scale.”

Also, it mentioned that interoperability is crucial:

Additionally, interoperability – the ability for a private ledger to connect with today’s existing global financial infrastructure, as well as other CBDCs and other digital currencies– will be critical. In fact, in its 2021/22 innovation program, the Bank for International Settlements identified interoperability for cross-border payments as a major priority for CBDCs.

Ripple’s proposed solution to this problem is the CBDC Private Ledger, which uses the same distributed ledger technology as the XRP Ledger, which means that it is “built for payments” and “designed for issuing currencies”; XRP could then serve as “a neutral bridge asset for frictionless value movement between CBDCs and other currencies.”

According to Ripple, transactions on the CBDC Private Ledger will be low-cost, reliable, and fast; initially, it will handle tens of thousands of transactions per second (TPS) “with the potential to scale to hundreds of thousands TPSs over time.”

Finally, Ripple’s blog post mentioned that the company is “currently engaged with Central Banks around the world to better understand their goals and assess how the CBDC Private Ledger can help achieve them.”

Monica Long, General Manager of RippleX, “Ripple’s initiative to create an open developer platform for money”, had this to say:

Tokenization has always been a key feature of the XRPL with over 5400+ issued tokens since inception. CBDCs will live on new private ledgers that run parallel to XRPL, using XRP as a bridge to interoperate w/ other currencies. No more walled gardens!

Matt Hamilton, Director of Developer Relations at RippleX, took to Twitter to clarify a couple of things for members of the XRP community:

  • “The public ledger is built for payments. And it was built nearly a decade ago, long before banks knew how they would use blockchains. This gives the best of both worlds, a ‘private’ blockchain for intra-bank, but linked to a public one for inter-bank.”
  • “Every single custodial exchange (Bitstamp, Binance, Kraken, Gemini, Coinbase, etc) is a ‘private ledger’. Just run on closed-source software. This is the same, but open source, and decentralised (within that entity).”

Featured Image by “vjkombajn” via Pixabay





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