• According to a report from CPA Australia, the Central Bank of France has discussed Ripple/ XRP as a possible platform for the digital euro.
• The report describes the RPCA based network as a permissioned network that “enjoys the confidence of many banks as a model for CBDCs.”

CPA Australia, a professional accounting association in Australia with over 166,000 members in 150 countries around the world, recently released a report, “Central Bank Digital Currencies (CBDCs): A Comparative Review,” revealing that France’s central bank has openly discussed Ripple and XRP as a possible platform for the digital euro.

The firm, which has 19 staffed offices worldwide, argues in the report that the world is entering a period of rapid technological change in light of the COVID-19 pandemic. The crisis has spurred the adoption of digital and contactless payment systems as well as the development of CBDCs. Therefore, the report aims to provide “an overview of innovations in central bank digital currencies.”

Ripple an option for the digital euro?

The report examines the relationship of Bitcoin, Ethereum, Ripple/ XRP, and stablecoins to CBDCs. While Bitcoin is described by CPA Australia as too volatile a medium of exchange and store of value, the report describes Ethereum as a fully decentralized blockchain-based software platform that is “outside any state control.” However, the report also notes that the Reserve Bank of Australia has issued a statement that it is considering running a CBDC program on the Ethereum network.

In the section titled “XRP – The digital token of Ripple,” CPA Australia refers to “Ripple” as an alternative platform to Ethereum.

‘Ripple’ is an alternative platform to Ethereum. XRP is the principal currency used on this platform, with the capability to facilitate payments like any currency or card. […] Ripple has its own patented technology – the Ripple Protocol consensus algorithm (RPCA) – to verify transactions.

Ripple and XRP enjoy the trust of many banks as a model for CBDCs because it is highly centralised and is based on a permissioned network where only certain network nodes can validate transactions, as opposed to decentralised and permissionless Bitcoin and Ether. Ripple also allows the creation of new currencies and Ripple developers can decide the timing and quantity of supply in a similar way to current central bank operations.

Although this description has been heavily criticized within the XRP community, as the XRP ledger is also decentralized and permissionless, there has been speculation that this description refers to a “private ledger” based on the XRPL.

As Ross Edwards, Ripple’s Global Head of Client Solutions, explained in a recent presentation, any financial institution can modify Ripple’s proposed design of a CBDC according to the demand or needs of a particular economic ecosystem or market. Depending on operational needs, a central bank can modify the centralized or decentralized data set, consensus algorithm, accessibility and authorization.

However, the following “note” in the report is likely to generate the most buzz:

France’s central bank, Banque de France, has openly discussed Ripple/XRP as a possible platform for Europe’s central digital currency.

This reinforces the rumor that first surfaced in February 2020. At the time, Ripple was mentioned in a Banque de France report on CBDCs. The central bank noted that units of a CBDC could be transferred to other blockchains. “Since the attributes of a unit of the wholesale CBDC (file representing the currency unit, keys enabling use) may be integrated in a cryptoasset circulating on another blockchain, which is possible on Ethereum and Ripple, for example, it would then become possible to use the unit on this blockchain.”

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