Arab Monetary Fund Group Labels RippleNet As Alternative To SWIFT

March 22, 2022 9:52 pm

The Arab Regional Fintech Working Group has recently released a new guide for Arab central banks that advises them on how to approach the digital assets industry going forward.

One of the most important details mentioned in the guide is that it lists RippleNet as a new additional alternative to the dominant SWIFT system indicating Ripple’s increasing popularity as an international payment system.

The release of this news also coincides with Clearing House’s partnership with Wells Fargo where the company is also known to have a partnership with Ripple.

RippleNet’s expansion in the international market also has continued despite the ongoing SEC lawsuit against the company in the United States and the company has been giving advice to the Digital Euro Association on the design of future CBDCs.

U.today reports:

The paper also specifically named Ripple XRP as a unique cryptocurrency insofar as it was one of the first “designed primarily for payments,” in contrast to most cryptoassets which were labeled as “speculative” stores of value.

Including a direct link to Ripple’s “Future of CBDC” report, the advisory paper clearly sees Ripple as having a serious role to play in the future blockchain-based, global financial infrastructure.

In reviewing recent global developments in digital currency, the advisory group specifically mentioned the ECB’s “digital Euro” project and concluded that “the experiments’ findings reveal that none of the examined topics have significant technical restrictions, and the design requirements can be met.”

Ripple has recently become a member of the Digital Euro Association.

The rise of SWIFT alternatives has become a popular topic recently as many financial institutions are looking to diversify the payment networks that are available to them and look to reduce transaction costs.

In the report, the proposal of Ripple as an alternative comes from the risks of using central bank digital currencies (CDBCs) such as possibly making the fiat currencies have reduced value.

As a result, this could cause financial instability along with a long list of other risks that CDBCs would bring along with them.

This view is quite different from a few other countries which are actively working on creating their own CBDCs such as India where the Reserve Bank of India will be issuing the “digital rupee”.

Similarly, Russia is also actively working on a digital version of the ruble through its own CDBC trials.

Gadgets360 reports:

The financial body has proposed the decentralised RippleNet network as an alternative to CBDC. The network’s native XRP cryptocurrency has been called unique in nature, citing the premise of its creation — ‘primarily for payments’.

CBDCs have a considerable risk of rendering fiat currencies powerless, a report by AMF’s Arab Regional Fintech Working Group has claimed.

“There are many risks associated with the international positions on local CBDCs ranging from the risk of ‘digital dollariastion,’ international spillovers, and the impact on the international role of currencies.

If a CBDC is used outside of its jurisdiction successfully, this could lead to a local currency losing its function as a medium of exchange, unit of account, storage of value, and eventually raises financial stability risks,” the report noted.

In any case, the listing of Ripple indicates the network’s rise to prominence as a leading payment network which may accelerate in growth once the company’s battle with the SEC concludes.

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