James Wallis, Ripple’s Vice President for Central Bank Engagements and Central Bank Digital Currencies (CBDCs), recently highlighted the role of CBDCs in advancing global financial inclusion in a brief video. Wallis explained that financial inclusion aims to extend financial services to those with low incomes and no ties to financial institutions. He pinpointed two key factors contributing to financial exclusion: low incomes and a lack of existing ties to financial institutions, leading to the absence of a credit history. Wallis argued that banks, often commercial entities driven by shareholder interests, face difficulty in serving those with limited resources as generating profits from such a demographic is difficult.
CBDCs, he argued, provide a cost-effective solution as they enable financial services at a significantly lower cost than traditional methods. Additionally, CBDCs offer streamlined payment options and chances to establish credit, even without previous ties to financial institutions. This enables individuals to build credit histories, acquire borrowing capabilities and stimulate the growth of their businesses. Wallis concluded that CBDCs represent a transformative innovation addressing global challenges in financial inclusion.
Ripple is working in partnership with more than 20 central banks globally on CBDC initiatives and has taken on the role of technology partner for the second phase of Georgia’s digital lari project. Moreover, Ripple is actively engaged in CBDC collaborations in Bhutan, Palau, Montenegro, Colombia and Hong Kong. In July, Ripple received recognition from Currency Research for its contributions to digital currency advancement and best sustainability initiative, particularly for fostering innovation in CBDCs.
In conclusion, CBDCs have the potential to offer a cost-effective solution for global financial inclusion, enabling individuals to build credit histories. Ripple is actively involved in numerous CBDC collaborations and has been acknowledged for its contributions to digital currency advancement.