- Central Bank Digital Currencies (CBDCs) offer a solution to financial exclusion. They are cost-effective, allowing for financial service provision at a much lower cost than traditional methods.
- Ripple is collaborating with over 20 central banks worldwide for CBDC initiatives. Ripple’s Vice President for CBDC Engagements, James Wallis, has highlighted the potential of CBDCs to enhance financial inclusion on a global scale.
Ripple VP Highlights the Potential of CBDCs to Enhance Financial Inclusion
Ripple’s Vice President for CBDC Engagements, James Wallis, has highlighted the potential of Central Bank Digital Currencies (CBDCs) to enhance financial inclusion in a one-minute video. Wallis explained that financial inclusion refers to providing financial services to people globally, including those with low incomes and no relationship with financial institutions.
Wallis identified two main factors contributing to financial exclusion
low incomes and a lack of pre-existing relationships with financial institutions, resulting in the absence of a credit history. Banks in regions where people are financially excluded are typically commercial entities with shareholders to answer to, making it challenging to serve individuals with minimal resources due to the difficulty of generating profits from such a demographic.
CBDCs: Empowering Financial Inclusion
Wallis argued that CBDCs offer a solution, for example, they are cost-effective, allowing financial service provision at a much lower cost compared to traditional methods. CBDCs also provide simplified payment options and opportunities to build credit, even without a prior relationship with a financial institution. This, in turn, allows individuals to establish credit histories and gain the ability to borrow money, fostering the growth of their businesses. Wallis concluded that CBDCs present a transformative innovation that addresses the challenges of financial inclusion worldwide.
Ripple is collaborating with over 20 central banks worldwide for CBDC initiatives and emerging as the technology partner to pilot the second stage of the CBDC project in the Republic of Georgia. Other countries where Ripple has live CBDC collaboration include Bhutan, Palau, Montenegro, Colombia, and Hong Kong.