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XRP, the third largest cryptocurrency in the world by market capitalization, is not competing with national digital currencies like the upcoming digital yuan, according to a senior Ripple executive.
Emi Yoshikawa, Ripple’s senior director of global operations, said XRP does not compete with either central bank digital currencies (CBDCs) or stablecoins.
In an August 19 interview with Japanese cryptocurrency exchange FXcoin, Yoshikawa said that XRP is complementary to global progress in CBDC and stablecoin development.
The executive said XRP should be viewed as a “bridging asset” in international regulation:
“There are various types of cryptocurrencies, but I think that XRP’s role as a bridge asset in international regulation and not competing with stablecoins or CBDCs, but on the contrary, is complementary. We believe various stablecoins and CBDCs will create synergy by addressing the liquidity problem by linking independent crypto assets, XRP. “
Yoshikawa mentioned Ripple’s flagship settlement product, On-Demand Liquidity or ODL. Formerly known as xRapid, Ripple’s ODL is designed to quickly process cross-border payments and reduce operational costs. Yoshikawa pointed out that the ODL is designed to eliminate pre-financing in cross-border payments.
Apparently, both stablecoins and CBDCs share some of ODL’s primary goals. Some of the existing CBDC initiatives such as China’s digital yuan apparently pose a threat to SWIFT’s dominance in terms of transaction speed. Several global banks have also noted CBDC’s potential to reduce financial transaction costs.
Yoshikawa’s remarks come shortly after Ripple was overtaken by the largest stablecoin, Tether (USDT), by market capitalization in May 2020. Often pegged to fiat currencies like the US dollar at a 1: 1 ratio, stablecoins they are also designed to provide cheaper payments and speed settlement times on a global scale.
