An independent body of global finance leaders says Ripple’s XRP-powered cross-border payment platform “leapfrogs” the efficiency of traditional remittance methods.
The Group of 30 published the report, calling on central banks and financial authorities around the world to be proactive in terms of regulating digital assets.
G30 experts discuss the theoretical possibility of a “systemic hegemonic currency,” which some academics have posited could possibly reduce “spillover shocks” that come with the US dollar acting as a reserve currency. The systemic currency could come in the form of a stablecoin pegged to the deposits of different central banks around the world.
The experts say the theoretical currency could offer benefits similar to what XRP already does.
“It is possible that such a stablecoin could be valuable for cross-border payments, serving a function similar to that offered in the private sector by Ripple, a real-time gross settlement system, currency exchange, and remittance network whose digital currency, XRP, leapfrogs slow and expensive correspondent banking.”
G30 experts argue currency tokenization could be the most serious disruption to the international payment system since bank intermediation. Still, they’re doubtful that crypto assets could ever act as fully functional currencies independent of governments.
“The libertarian view that a superior private sector currency (such as a cryptocurrency) could somehow supplant a government currency is utterly naïve. The long history of currency shows that while the private sector may innovate, in due time the government regulates and appropriates. Currency competition between the private sector and the public sector is never a level playing field.”
Accordingly, G30 researchers say the public sector needs to be more active in terms of providing “foundational infrastructure” for digital assets in order to take advantage of their benefits and ensure legal compliance.
The report says any international systemic currency could come with coordination costs and efficiency issues.
“Given the challenges the euro has faced, and the difficulty of having transnational money without a transnational fiscal and regulatory authority, it is difficult at this point to see how a global currency could evolve digitally when it has not yet happened with the existing system. Nevertheless, the externalities posed by digital currencies may prove so significant that previously unthinkable levels of international coordination become possible.”
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