• B Vrettos and M Bacina

Ripple - built for a CBDC?


Research shows that 80% of central banks worldwide are engaging in central bank digital currency (CBDC) related research, with banks exploring existing open source platforms to run a CBDC on, such as Ethereum which the Reserve Bank of Australia has considered for wholesale bank settlements.


A fully open model such as used in the Bitcoin network, where anyone can run a node transact, validate and view the transactions does not fit in with the requirements of a CBDC for most central banks. This is in part due to concerns about speed and that pseudononymous blockchains are not very private once wallet addresses start to be identified. Additionally, the speed and volume required for CBDC payments simply cannot be matched by public permissionless systems.


Ripple has proposed a solution to help speed CBDC adoption, announcing that it is:-

piloting a private version of the public, open-source XRP Ledger that provides Central Banks a secure, controlled and flexible solution for the issuance and management of digital currencies.

A report by CPA Australia analysed the features of the 3 most transacted digital currencies (Bitcoin, Ether and XRP) and what features are likely to prevail for the suitability for CBDCs.


The decentralisation and inability of private actors to control public ledgers such as Bitcoin and Ether are benefits for their novel payment mechanisms but don't align with the features sought by banks considering a CBDC. The CPA report states that France's central bank has "openly discussed Ripple/ XRP as a possible platform to Europe's central digital currency" and the reiterates the preferential features of XRP as:

Ripple and XRP enjoy the trust of many banks as a model for CBDCs because it is highly centralised and is based on a permissioned network where only certain network nodes can validate transactions, as opposed to decentralised and permissionless Bitcoin and Ether.

SEC's lawsuit against ripple in late last year has not deterred their push to support CBDCs.


Ripple's proposal is an example of how some features of blockchain technology may be incompatible with the pursuit of CBDCs, however, there are configurations of that existing technology which can satisfy the security and speed required by such projects. As always, education surrounding blockchain technology is key to help dismiss the myths and falsehoods which persist so that central banks can freely experiment and consider innovative payment systems such as CBDCs to unlock significant benefits for their citizens.