Connect with us

CBDC

Assessing Ripple-Colombia Central Bank Partnership

Published

2 days ago

on


To improve the country’s high-value payment system, Colombia’s central bank is experimenting with Ripple’s new end-to-end central bank digital currency technology. How will this collaboration affect the price of XRP?

On Thursday, Ripple announced that the central bank of Colombia and the Ministry of Information and Communication Technologies (MinTIC) would be exploring the use of blockchain technology in the country’s high value electronic payment system with Ripple.

The central bank did not specifically state it will pilot test a central bank digital currency, even though it will employ Ripple’s CBDC platform, supported by a private version of the XRP Ledger.

Ripple has not let regulatory constraints prevent it from innovating and expanding its reach, notably in Colombia, despite the fact that the blockchain startup is still engaged in a highly publicized legal dispute with the US Securities and Exchange Commission.

A Technological Solution In The Offing For Colombia?

Blockchain technology was highlighted by Colombia’s minister of information and communication technology, Mauricio Lizcano, who claimed that it would offer a technological solution (Prototype) that would enable simulations of various use cases in the high-value payment system.

Peersyst Technology, a blockchain technology company based in the region, is MinTIC’s direct partner.

According to James Wallis, vice president of central bank engagements and CBDCs, Ripple:

“By harnessing the power of the CBDC Platform, based upon the XRPL, this project will pave the way for transformative advancements in the utilization of blockchain technology within the public sector.”

Ripple previously introduced its end-to-end XRPL-driven CBDC solution, which would enable central banks, financial service providers, and governments to establish their own digital currencies while also assisting them in resolving issues with CBDC deployments.

The Colombian government said in August 2022 that it was looking into introducing a CBDC to facilitate transactions and decrease tax evasion, and that it also planned to prohibit cash transactions for quantities more than 10 million Colombian pesos (about $2,390).

A digital asset custody technology provider, Metaco was bought by Ripple a few months ago, and its clientele includes several large, systemically significant institutions.

What The Latest Collaboration Means For XRP Price

Meanwhile, XRP is back in the red despite briefly rising above $0.55 earlier, adding more than $2 billion to its market capitalization in a 24-hour span, and the publication of the contentious papers pertinent to the Ripple lawsuit.

At the time of writing, and after news of the Ripple-Colombia central bank partnership broke out, the price of the XRP token looked it could use more energy to extricate itself out of negative territory.

According to the most recent data provided by cryptocurrency market tracker CoinMarketCap, XRP was down by almost a percent in the twenty-four hour time frame, down 8.56 percent in the last seven days, and threatening the 18 percent gain over the past month. XRP is currently trading at $0.47.

XRP market cap currently at $24.8 billion. Chart: TradingView.com

There are a number of possible explanations for the recent drop in the price of XRP following the announcement of the partnership between Ripple and the central bank of Colombia.

XRP price all in red. Source: CoinMarketCap

First, investors may not put much stock in the relationship because of the regulatory concerns that typically accompany partnerships between cryptocurrencies and traditional financial institutions.

The trend of XRP’s price could be affected by selling pressure due to this uncertainty. The general state of the market and the attitude of investors could also be factors in the drop of cryptocurrency prices.

XRP Price Trajectory: Factors To Consider

The price of XRP may fall regardless of specific news or collaborations if there is a lack of confidence in the crypto sector or a general slowdown in the broader economy.

Investor emotion, market conditions, and regulatory considerations all play a role in how much of an effect the Ripple-Colombia central bank agreement has on XRP’s price.

At the same time, the dispute between the SEC and Ripple is a major factor influencing the value of XRP. Although the release of the Hinman documents first boosted XRP since they appeared to support Ripple’s case, the altcoin’s price eventually fell as investors’ confusion and worry overcame their initial joy.

(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).

Featured image from The Coin Republic





Source link

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

CBDC

Privacy should be considered in ‘potential retail CBDC’ — Treasury official

Published

5 days ago

on

June 14, 2023

By



Privacy and the ability to transact anonymously should be considerations in the design of a digital dollar, a United States Treasury official has said.

On June 13 the Treasury Department’s Assistant Secretary for Financial Institutions Graham Steele spoke at a payments-focused conference in Texas about the Federal Reserve’s controversial FedNow system and central bank digital currencies (CBDCs).

Steele said one challenge of a retail CBDC is minimizing illegal transactions while maintaining user privacy. He said considerations should still be made about how to protect user anonymity:

“It is important that we consider the extent to which privacy and anonymity might be preserved and explore the technologies and methods available, including Privacy Enhancing Technologies, to enable such protections in the design of any potential retail CBDC.”

In his remarks, Steele weighed the benefits and risks of a possible CBDC saying it could promote a “competitive payment environment.”

On the other hand, a retail CBDC would be directly backed by the Fed and could provide a safer option for consumers during bank runs which could “destabilize private sector lending” according to Steele.

He pointed to the recent banking crisis and said the “access to non-deposit alternatives outside of the banking system may have changed the nature and speed of bank runs.”

He added the U.S. “has not yet determined whether it will pursue a CBDC” but a Treasury-led group is evaluating the implications of a potential CBDC in the country.

Steele said the evaluation includes looking over “policy objectives related to global financial leadership, national security, and privacy, illicit finance and financial inclusion.”

Related: 7 central banks and BIS continue examination of ongoing policy issues for retail CBDC

On the Fed’s FedNow instant payments system, Steele thinks having multiple options for payment operations “promotes choice and competition in payments” which he believes will encourage the “development of new payment services and features” along with enhancing payments system resilience.

FedNow has witnessed political pushback. Presidential hopefuls Robert F. Kennedy Jr. and Ron DeSantis are against the system claiming it would pave the way for a CBDC which both claim will hand the government too much control.

In April, Federal Reserve Board governor Michelle Bowman said it was “difficult to imagine” that a CBDC could be justified beyond use in “interbank and wholesale transactions.”

Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers