Aiming for impact, Ripple CBDC lead says proliferation of digital currencies not to be feared

Interview
December 2023

IN BRIEF

  • "In working with central banks around the world, we’ve learned different countries will have different needs in developing their digital currency strategies and ultimately, implementation."
  • "I think success will be where we see sovereign digital currency having an impact for stakeholders; [when that happens], we’re going to see a significant acceleration across the entire landscape."
  • "I think that the sovereignty of money will only strengthen in the current geopolitical environment. In the future, central bank digital currencies (CBDCs) will be the way end users engage with token-based services and will enable rather than detract or fragment other capabilities and forms of value."

As part of the VISION by Protiviti webinar, “Exploring an Uncertain Future of Money,” Lata Varghese, Managing Director in Protiviti’s Technology Consulting practice and Digital Assets and Blockchain practice leader, interviewed Ross Edwards, Senior Director, Client Solutions and Delivery, CBDC for Ripple. In this role, Edwards works with central banks, regulators and other stakeholders on the development of use cases, required capabilities, process changes and technology for the introduction and effective use of sovereign digital currencies. What follows is part of their discussion on CBDCs, technology, regulation and infrastructure in a digital future and a few key findings of the Protiviti-Oxford Executive Outlook on the Future of Money research report.


Lata Varghese: In the Protiviti-Oxford Executive Outlook on the Future of Money survey, we asked how comfortable business leaders would be using exclusively digital and crypto currencies in the future. That number was 64%; so more than two-thirds of global business leaders say they would be comfortable using only digital and crypto currencies in the future. What’s your reaction to those data points? Are you surprised?

Ross Edwards: Looking at the Oxford survey results, I am a little surprised with the optimism, to be honest. I work with many businesses exploring digital assets, and they do have a lot of challenges ahead of them. Generally, in working with businesses, I find there’s more of a need for an experience curve rather than a learning curve. In reality, a lot of the tooling around digital currencies is very intuitive. When I talk to business leaders, it’s not so much their level of comfort that needs to grow, but their comfort in their team’s ability to learn and be comfortable using digital assets. In terms of the overall survey results, I think it is reflective of a broader view of the future and an acceptance that payments are moving in this direction. For me, it’s a great source of optimism that business leaders share our views on a digital future and recognize there will be a need to change their businesses, and the data says they are optimistic about being able to adapt accordingly.

The other data point I thought was very telling from the survey was 70% of business leaders saying they plan to identify and leverage strategic partnerships with fintech companies, payment processors or blockchain providers over the next decades. That tells me they’re aware of the need, but they don’t necessarily feel like they need to be experts in the space; they want to find the right partners in this space. And I think that that’s where Ripple can fill the void and provide intuitive solutions that work for their businesses.

Varghese: Right, and as the lead of solutions and delivery capability for Ripple’s global CBDC business, you work with central banks as well as regulators on the development of use cases, capabilities, and technology for the effective use of sovereign digital currencies. Tell us a little bit about Ripple’s full stack CBDC platform and the progress made with the various governments in turning their digital currency plans into reality. What does success look like?

Edwards: Ripple is a very early pioneer in the enterprise blockchain and crypto space, and a lot of our early focus has been on improving cross-border payments. In particular, using open-source technology, enterprise technology, and public digital asset XRP for improving those payments. We took a look at our technology, capabilities and expertise, and we found that translated well to the issuance of currencies and, in particular, the issuance of currencies in regulated spaces and CBDCs. We’ve been engaging central banks for a number of years and have developed the Ripple CBDC platform providing a sound basis using these technologies and providing the security, certainty and usability central banks need to create a stable digital currency, while adding value on top of that ecosystem. In working with many central banks around the world, one thing we’ve learned is that different countries will have very different needs in developing their digital currency strategies and ultimately, implementation.

70%

of business leaders say they plan to identify and leverage strategic partnerships with fintech companies, payment processors or blockchain providers over the next decades.

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digital currency signs

We work with some countries that just need basics for their businesses and consumers to both hold value and transact digitally, including ensuring their existing infrastructure is prepared for digital assets. In many cases, the financial system is extremely well trusted and they’re looking at other value-add capabilities CBDCs can bring. If we look at one end of the spectrum, we work with Palau, which has gone through a full production rollout of a pilot to hundreds of government employees, enabling them to spend digital currencies at merchants across the country. We’re also working with many other countries on different types of payment needs; we’re working with Montenegro, for instance, on the opportunities that are going to exist as the digital euro starts to evolve. In South America, we’re working with Colombia on how digital currency can improve their higher value FI-to-FI payment landscape. And on the other end of the spectrum, we’ve recently worked with the Hong Kong Monetary Authority where we looked at the use of tokenized forms of real estate, the hypothetical Hong Kong dollar and explored how a lending protocol can provide benefits to consumers and the banking sector.

You asked what success looks like: I think success will be where we see sovereign digital currency having an impact for stakeholders. That’s what will be extremely important—is this making a difference? All of our projects are focused on impact and making a difference. And that difference can be very different across different countries. So, I think when we start to see some initial instances of this, we’re going to see a significant acceleration across the entire landscape.

Varghese: Speaking of acceleration across the entire landscape, there are numerous crypto currencies and stablecoins promoted by different players and all are still looking for true scale. Seeing that demand and the popularity of these digital monies, clearly central banks have jumped in, and they are also in a race to provide similar options for their people right now. Across all of these, it seems to me like the enabling infrastructure, the controls, the regulatory clarity—all of that still needs to evolve a fair bit to achieve scale and deliver the vision of democratizing finance and making it more efficient. Does adding CBDC technology platforms help the need, or does it add more complexity to an already busy space? In other words, does all this perhaps delay the promise of cryptographically secured payment tokens travelling efficiently on interoperable blockchain ledgers?

Edwards: The success of new technologies and operating models requires more than technical capabilities; I think it requires regulatory status, trust and adoption, and all of these are obviously very closely related. And so, when looking at CBDCs, which is my focus, we don’t see that as a replacement for traditional fiat currencies at this stage, and we don’t see it as a replacement for crypto or various forms of stablecoins, either. So, each of these offerings will have different economic models and will have unique design decisions and will be beneficial for different purposes.

You asked what success looks like: I think success will be where we see sovereign digital currency having an impact for stakeholders. That’s what will be extremely important — is this making a difference?

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CBDC

I think that the sovereignty of money will only strengthen in the current geopolitical environment. In the future, CBDCs will be the way end users commonly engage with token-based services and will enable rather than detract or fragment these other capabilities and forms of value. In working with our Ripple payments business—and I think this is true for a lot of crypto-based services—we talk about the importance of on ramps and off ramps. I think CBDCs can remove the need for this altogether as users begin and end their journey in that tokenization space. Of course, that needs to coincide with a new user experience that is suitable. The key benefit of blockchain technology is that we can use multiple systems, networks and economic models, and these can work together with the same properties of a single system, in particular, around risk. So yes, I think we’ll see a proliferation, and we’ll see different forms of value, and networks and technologies potentially die off, as well. But I think that proliferation is somewhat to stay, and I think the technology and new operating models can handle that.

In terms of the timing, I think ultimately cryptographic secure tokens, or payment tokens, can travel efficiently on interoperable blockchains today; however, the key is really about accessibility, user experience and regulatory clarity. And as per the projects I mentioned previously, we’re making significant progress across those today. And I think in the coming years, we’re going to see a lot of this move to the mainstream and of course, that doesn’t mean suddenly the mainstream is going to be investing all their savings in Bitcoin, right? This is about using services that look a lot like they do today but taking advantage of some of these new technologies and operating models that we’re seeing.

Ross Edwards leads the solutions and delivery capability for Ripple's global CBDC business, working with central banks, regulators and other stakeholders on the development of use cases, required capabilities, process changes and technology for the introduction and effective use of sovereign digital currencies. He joined Ripple in 2015, opening up the first international office in Sydney, Australia and working with banks and financial institutions globally on the use of Ripple technology and blockchain to enable new payment services for their customers.

Ross Edwards
Senior Director, CBDC, Ripple Asia Pacific
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Lata Varghese is Managing Director in Protiviti’s Technology Consulting practice and Protiviti’s Digital Assets and Blockchain practice leader. Lata is a seasoned executive with over 20 years of experience in helping clients successfully navigate multiple business and technology shifts. Prior to Protiviti, Lata was one of Cognizant’s early employees when the firm had less than1,000 employees, and she grew with the firm as it scaled to a $17Bn, Fortune 200 enterprise.

Lata Varghese
Managing Director, Protiviti
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