Dutch Central Bank Hails Ripple’s Capacity For Real-Time Payments

De Nederlandsche Bank (DNB), which is Netherlands’ central bank, has shown interest in Ripple’s payment protocol. The bank hailed Ripple’s network as an excellent infrastructure that can boost the Dutch payment system’s efficiency and speed.

DNB referenced research conducted by the National Forum on innovative ways to improve the Dutch retail payment system. The study found that Ripple could offer financial institutions such as banks the infrastructure needed to facilitate real-time payments.

As per the research, Ripple’s fast blockchain technology is a tangible innovation that can increase payment processing speeds and cut costs for the banking sector. The XRP protocol boasts a fast payment process that takes just 2-5 seconds and requires less computer power than the BTC network. 

A statement from the Dutch central bank noted: 

“Integration of the payment protocol would allow banks to offer their customers the ability to transfer any amount of money in any currency to other institutions that use the protocol, without the need for intermediaries.”

Many banks worldwide have already integrated Ripple’s payment protocol, including Bank of America, Standard Chartered, Santander, and SBC.

DNB Supportive of a Central Bank Digital Currency 

Besides leaning into blockchain tech as a means to transform cross-border remittances, the Dutch central bank is also interested in a possible central bank digital currency (CBDC). 

As per a report from April of last year, DNB officials stated that they were “ready to play a leading role” in research relating to a CBDC. The bank added that the Netherlands is an ideal region for testing such a sovereign digital currency.

De Nederlandsche Bank outlined several reasons that make it believe a CBDC would significantly benefit Dutch citizens. Per the report, a CBDC could introduce increased cost and speed efficiencies in cross-border payments and serve as a backup to payments made in private money.

However, officials at Netherland’s top bank cited certain possible risks that a CBDC could pose. One major concern is that many citizens could withdraw funds to avert risk by converting their bank balances into CBDC during times of financial turmoil.

The Race For CBDCs is Heating Up 

An accelerating global decline in the use of physical cash during the Covid-19 pandemic seems to be the motivation for many central banks to digitize their payment systems.

Concerns raised by Facebook’s Libra currency are also prompting the DNB and other central banks to consider rolling out their own digital currency to maintain control of the financial system.

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China is currently ahead of the pack as it aims to become the first nation to launch a CBDC. On Jan 26, 2021, the Asian country rolled out more pilot tests for its digital Yuan in major cities such as Guangdong, Beijing, and Shanghai.

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