The World Bank’s 2021 report has resurfaced, highlighting Ripple’s XRP and Stellar’s XLM as ideal cryptocurrencies for cross-border payments.
According to the report, these two digital assets “enable faster and more efficient cross-border payments relative to correspondent banking.” The World Bank acknowledged the potential of these cryptocurrencies to disrupt the traditional financial system and challenge the established clearing and settlement services provided by central banks and institutions.
The report delved into the advantages of the XRP Ledger, which can process transactions involving any currency, allowing users to transact in both crypto and fiat currencies through near-instant and low-cost transactions. This is a significant improvement over the existing global system, which can take over three days to settle cross-border transactions and often incurs high fees, particularly in regions like Sub-Saharan Africa, where users can pay up to 8% of the transferred value in fees.
Interestingly, the World Bank report described XRP as a cross-border stablecoin, a classification that has gained relevance as Ripple has announced plans to launch its own stablecoin on the XRP Ledger. This move is in response to user demands and aims to complement and grow the XRP ecosystem.
With the introduction of the new Ripple stablecoin, the report suggests that XRP itself is unlikely to be utilized as a payments stablecoin, as envisioned by the World Bank. The upcoming stablecoin will likely take on this role, as stablecoins are better suited to maintain their value against underlying currencies, a critical factor in cross-border transfers and payments.
The resurfacing of this World Bank report underscores the growing recognition of the potential for cryptocurrencies, particularly XRP and XLM, to revolutionize cross-border payments and challenge the traditional financial infrastructure.