At Carnegie hall in New York, Ripple recently hosted the “Central Bank Summit on Blockchain”. Central bankers from at least 24 different countries attended the conference to talk about how technology is likely to impact the global payment landscape.
The event was lead by the CEO of Ripple, Brad Garlinghouse who stated that it provided an opportunity to
…explore the full payments landscape: central banks’ domestic trials, Ripple’s growing cross-border network and interoperability across systems. Together, these form the beginning of an Internet of Value, where payments move as easily as the data across the internet.
The “IoV” or Internet of Value has been called the internet 3.0 and has the potential to do to the world of payments and finances what the internet of information did to print media.
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How The IoV will Change the World
Kicking the summit off was a presentation from the International Monetary Fund (IMF) that talked about the potential for Fintech technology to truly disrupt the current market. We have previously covered the IMF’s positive comments with respect to blockchain technology and crytpocurrencies.
There were also numerous discussions that centred around local attempts by central banks to make blockchain based payments. These bankers also used this as an opportunity to upgrade their existing infrastructure such that they could facilitate payments with digital currencies.
There was, however, an understanding that there could not be a universal solution that would have all central banks implementing the same technology in their local markets. There was a consensus view that each country would have its own unique circumstances that warrants varying degrees of adoption.
This is something that the team at Ripple were particularly familiar with given their work on the interledger protocol. Interledger is a payment protocol that allows for sending payments across different ledgers. Hence, it is viewed as a viable solution for combining centralised and distributed payments.
Cross Border Pains
While there may have been varying opinions on the immediate need for local implementation, most participants agreed that cross border payments were ripe for disruption from blockchain technology. This is also a topic that Ripple is particularly well versed at.
The team at Ripple went over their knowledge of blockchain use for interbank payments. This has already been implemented by a number of banks which has enabled them to make cross border payments that are real time and with full transparency. Ripple went over a number of presentations on how this has already been used by a large group of clients.
The Focus on Liquidity
When it comes to financing and payments, seamless liquidity is the Holy Grail. Currently, the system operates through a slew of pre-funded accounts that banks may have at other counterparties. This has to be kept maintained and comes at an opportunity cost for un-deployed capital.
Moreover, these pre-funding solutions are not compatible with “high volume corridors”. This was addressed in the second half of the conference that covered the use cases of digital currencies. These would facilitate global reach and liquidity without the need for arcane pre-funding agreements.
For example, adoption of the XRP token which allows for a connection between Fiat currencies and digital assets has greatly improved liquidity and reduced costs. The team shared current examples of partners who have done just that.
Although many people view blockchain technology and cryptocurrencies as a way to “escape” the strictures of central banks, the Summit shows that the two are not mutually exclusive. As central banks are still highly prevalent in our lives, improving their efficiency is a benefit to all.
With Ripple brining all of these players into one room, they were able to present the best case for the IoV. As Brad Garlinghouse put it:
These blockchain conversations have been happening in isolation. The value of the Central Bank Summit was in exploring and connecting these efforts, as together they create the next generation of payments.
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