XRP and XLM in trouble as CBDCs aim to make cross-border remittances cheaper and faster


  • CBDC pilots demonstrate capability to sidestep complicated existing arrangements and reduce transaction time.
  • Central bank institutions in Hong Kong, Thailand, China and UAE operating under the Bank of International Settlements are involved in the pilot scheme.
  • Countries like China focus on replicating cash circulation through CBDCs.

The outcome of recent Central Bank Digital Currency (CBDC) pilots shows slashed cost and reduced transaction time. Cryptocurrencies currently utilized for making cross-border settlements, Ripple (XRP) and Stellar Lumens (XLM), are likely to face stiff competition from CBDCs. 

CBDC pilot by Bank of International Settlements slashes transaction fees by 50%

Central banks worldwide are exploring the idea of a digital currency issued centrally in lieu of keeping up with technological development. 

Several financial institutions have adopted Ripple’s real-time gross settlement system, which uses XRP as its native asset, over the years to reduce costs and time involved in moving funds cross-border. Ripple established a series of partnerships and collaborations, boosting the practical utility of XRP

Competitor XLM, the native cryptocurrency for Stellar, an open-source blockchain payment system, solves the same problem. 

 In July the Bank of International Settlements released a blueprint of its instant cross-border payments solutions, Nexus. Though traditional banks have found Ripple’s solution helpful, Nexus will challenge payments giants by connecting regular instant payment systems (ISPs) across various jurisdictions. 

Earlier today, BIS tweeted about the success of its successful pilot run

The promising results of the pilot are likely to motivate further centralized institutions to participate and adopt BIS’s solution. 

BIS has confirmed that the recent pilot reduced transaction settlement time from three to five days to a few seconds, and transactions were completed within a few seconds through a network of correspondent banks. 

Governments worldwide are exploring the use of CBDCs to improve the working of their financial systems, unlike China, which is focused on exploring its retail utility. Central bank institutions in Hong Kong and Thailand were involved in the pilot. It has now expanded to include China and UAE’s central banks under the auspices of BIS. 

Jerome Powell, active chair of the Federal Reserve, recently confirmed that the central banking system of the US is considering the launch of a digital currency. 

We are working proactively to evaluate whether to issue a CBDC, and if so– in what form.


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