- According to senior Ripple employee Emi Yoshikawa, XRP neither competes with central bank currencies nor stablecoins.
- In a world of CDBCs, XRP could also serve as a bridge currency for cross-border payments in order to solve the liquidity problem.
The Senior Director of Global Operations at Ripple, Emi Yoshikawa, spoke in an interview with the Japanese financial portal FXCoin about the relationship of Ripple’s XRP token to stablecoins and to central bank digital currencies (CBDCs). Yoshikawa thus spoke about an important topic for the XRP community, especially with regard to the rapidly evolving landscape of central bank digital currencies worldwide.
As the Ripple executive explained, XRP does not compete with central bank digital currencies or stablecoins. XRP could be complementary in a world of CBDCs and, as in the current banking system, could be used as a bridge currency for cross-border transfers. Specifically, in response to the question of whether stablecoins and CBDCs are competitors for XRP, she stated that XRP is not in competition with them:
There are different types of crypto assets, but I believe that the role of XRP as a bridge currency is not in competition with the stablecoins and CBDCs, but on the contrary is complementary. We believe that XRP as an independent crypto-asset will build a bridge between different stablecoins and CBDCs to address the liquidity problem and create synergies.
Referring to the advantages of ODL over the traditional banking system and the way cross-border payments are made, Yoshikawa said that ODL will enable the transition to a fully demand-driven model:
This is considered one of the biggest pain points, especially for smaller financial institutions. The use of crypto assets eliminates the need to pre-finance nostro accounts and allows you to make full currency conversions when needed. Specifically, the sender’s currency is converted to XRP at the exchange in the country to which the money is sent, and then XRP is immediately transferred to the wallet of the exchange in the destination country, where it is converted to the local currency and delivered to the final recipient. If the current pre-financing model is batch-based, ODL will allow us to move to a fully demand-driven model.
In the interview, Yoshikawa also stressed the importance of On-Demand Liquidity (ODL) for Ripple. The XRP based payment solution is currently the focus of Ripple’s efforts. In particular, the company is currently looking to open up new payment corridors, which, as Yoshikawa emphasized, involves some regulatory tasks and the conclusion of new partnerships:
The most important thing is the spread of ODL. For ODL to be introduced in new markets, we need to clarify a number of requirements, including discussions with local authorities, cooperation with partners and liquidity in the market. There are many barriers, as this is a completely new structure, but we are making progress with each one of them. In particular, we are prioritizing markets that have a good regulatory understanding of crypto-assets.
In the interview, Yoshikawa also emphasized the role of Xpring in creating new use cases for XRP and Interledger technologies. Specifically referring to XRP community in Japan, she explained:
We hope that more and more Japanese developers will become familiar with XRP and Interledger and use them in the future. In fact, there is a movement within the Japanese XRP community to establish a group to develop services using the XRP ledger that has caught our attention.