The Swiss and French Central banks have announced that along with a consortium of private players that includes Accenture, they would be conducting using central bank digital currencies (CBDC) for cross-border settlement.
Though the banks have not declared on which ledger it would be in, there is speculation that it might be built on Ripple (XRP). Ripple is known to have been building a private ledger for use by central banks and it is also known the French central bank had preferred Ripple as the ledger of choice for a digital currency. But with Ripple being hit with legal cases by SEC, it is not known whether the central banks have had second thoughts on using Ripple.
“It is essential for central banks to stay on top of technological developments. The Swiss National Bank is already investigating the settlement of tokenized assets with wholesale CBDC as part of Project Helvetia. We are looking forward to expanding this analysis to a cross-border context by participating in this exciting initiative,” said Andréa M. Maechler, Member of the Governing Board, Swiss National Bank.
The project is named Project Jura after the mountains that separate Switzerland and France. The project involves the exchange of the French digital financial instrument against the euro wholesale CBDC on a delivery versus payment settlement mechanism and then the exchange of the euro CBDC against the Swiss Franc on a payment versus payment settlement mechanism, the banks said.
The idea is to create a digital version of the euro and the Swiss Franc and the banks are trying to test out whether the cross-border payments and settlements of these currencies can be handled via a distributed ledger. Ripple did start working on this a long time back and it is believed that they already have the technology and the ledger to handle this kind of payment and settlement mechanism and that is why it is believed that central banks continue to favor Ripple for digital currencies despite some of the bad press that it has been getting in the US.
Various central banks have already claimed to be working on digital currencies with China already expected to be working on one and Brazil central bank also announcing its plan to work on a digital currency after holding meetings with Ripple Labs. The central banks must realize that the world is moving away from legacy systems into digital systems that are more transparent and faster and the sooner that the banks begin to adapt to these changes, the better it is for them and their users.
In the meantime, Ripple remains stuck with the SEC, who seems to be stalling as it fights for survival.