Ripple has announced it is piloting a private version of the XRP Ledger to be used by Central Banks as they look to develop, issue, and manage their own secure, controlled, and flexible digital currencies.
As Central Bank Digital Currencies (CBDC) are bound to emerge, distributed ledger specialists must meet their demands, with specific market challenges and opportunities for each country. More than 80% of central banks are actively exploring some form of sovereign-backed cryptocurrency.
Most ledgers are not built for payments and cannot handle the volume of transactions that a successful retail CBDC will require. Additionally, most blockchains are public ledgers, which is incompatible with central banks’ need for transaction privacy and control.
CBDC will thus be built on private ledgers and must be interoperable as they need to connect with the existing global financial infrastructure, as well as other CBDCs and other digital currencies.
Ripple’s CBDC Private Ledger is based on the same blockchain technology that powers the XRP Ledger (XRPL). It is designed for payments and issuing currencies. Over 5,400 currencies were issued on the XRPL over the past 8 years.
According to the DLT specialist, the CBDC Private Ledger will handle tens of thousands of transactions per second (TPS) initially with the potential to scale to hundreds of thousands TPSs over time. The core technology behind this new CBDC Private Ledger has been running for more than 8 years without incident and with billions of dollars of value transacted every day, the company claimed.
“We are currently engaged with Central Banks around the world to better understand their goals and assess how the CBDC Private Ledger can help achieve them. We believe this solution will overcome the major challenges around creating and managing a sovereign digital currency, while amplifying the value and benefits for Central Banks, their partners and, above all, the millions of people who will use it.
“And we’re just getting started. We are also working on a fresh approach where Central Banks will be able to join a network of CBDC Ledgers that enables full settlement interoperability, while allowing each member to retain their monetary and technological independence. We believe this will be a game-changer for Central Banks and are excited to release more details on how it works very soon”, Ripple stated on its blog.
France’s central bank, Banque de France, has openly discussed Ripple/XRP as a possible platform for Europe’s central digital currency.