The XRP Ledger is often branded as the blockchain for banks, and some of the world’s largest financial institutions have deployed Ripple’s technology to power their multi-currency payment systems.
But if the platform is ever to become the crucial infrastructure that its strongest proponents think it should be, connections to major commercial banks might not be enough. Now, Ripple is courting the world’s central banks too, in a bid to secure a role in the emerging field of central bank digital currencies (CBDCs).
Officially launched in May 2023, Ripple has billed its CBDC platform as a private ledger that is powered by, but still distinct from, the public XRP Ledger.
Since its inception, the platform has proven especially popular with central banks in smaller countries and territories, which might not have the resources to build their solutions from scratch.
In the latest endorsement of the platform, the National Bank of Georgia announced on Thursday, November 2, 2023, that it has chosen Ripple as its technology partner for the digital lari pilot.
Georgia’s central bank joins its peers in Bhutan, Colombia, Palau, Montenegro, and Hong Kong, which are each in various stages of piloting Ripple’s CBDC technology.
Meanwhile, Ripple’s managing director for Europe recently said that the company was in talks with more than a dozen governments around the world that had expressed an interest in the platform.
In a world where its technology forms the foundation of a CBDC-based global payment system, Ripple would become one of just a handful of private companies that have achieved such institutional status.
Just as card payments today are inconceivable without Visa and Mastercard, and US securities markets are now dependent on the Depository Trust & Clearing Corporation (DTCC), the CBDC payments market could one day come to rely on Ripple.
Of course, while some people may find this prospect disconcerting, it is worth remembering that private enterprises have always formed the cogs and wheels of the global economy—not just vessels for profit that move capital from A to B, but key structural components that define what money is and how it functions.
With financial privacy at stake, however, the question of who we trust to build tomorrow’s CBDCs is of vital significance. And with the technology seemingly on the cusp of mass adoption, decisions made today could have profound consequences in the years ahead.
In Georgia and elsewhere, central banks are entrusting Ripple with nothing less than the future of their monetary systems. For a financial technology company, there could be no greater responsibility.