The battle for control over the cross-border payments market is heating up. On one hand, there is SWIFT representing the status quo, while on the other hand are the disruptors, like ripple and IBM-Stellar. So far, from the developments at the SIBOS conference, it is the disruptors that seem to be winning. A few days ago, Ripple’s Marcus Treacher sent out a tweet, which could be construed to mean that SWIFT is still a few years away from implementing DLTs.
But that’s not the only argument that shows the massive strides that DLTs have made in the cross-border payments market. IBM and the OMFIF (Official Monetary and Financial Institutions Forum (OMFIF) have released a survey showing that central banks are warming up to the idea of digital currencies.
According to this report, in a survey of 21 central banks, 54% of them believe that there is a future in CBDCs and that they can help improve speed and efficiency in the cross-border payments. That’s an indicator that central banks are slowly warming up to the idea of DLTs. What’s even more interesting is the fact that the central banks that participated in the survey are significant in the global financial system. For instance, the European Central Bank was part of this survey, and it’s a key player in the global banking system.
Even with such positive signals for DLTs, SWIFT has released a report that pretty much takes the stand that the adoption of DLTs is still far off from adoption. In a report titled, National digital currencies: Will they cash in? SWIFT leans more towards CBDC’s being more of a risk to the stability of the financial sector. It argues that they could reduce control by central banks over the monetary system, and create instability. The report then arrives at the following conclusion:
“…it is going to take a great deal of work to convince any central bank to take the risk of issuing a CBDC. The current balance between central and commercial bank money works well. There is no unsatisfied demand from a majority of consumers for anything more than instant payments of the kind available already. Negative rates of interest can be created by other means. The threats to commercial bank funding and wider financial stability are perceived, but not predictable. “No central bank is seriously considering issuing a CBDC at this time.”
Such reports and sentiment could be an indicator that SWIFT is not ready for the disruption that is coming with the entry of DLTs. This gives DLTs that are targeted at the cross-border payments market, a significant edge in the market. This is a massive vote of confidence for DLTs such as XRP and the Blockchain World Wire that is built on stellar.
Once the adoption starts, DLTs like ripple’s XRapid will see a massive upsurge in prices. The adoption of XRapid at scale has the potential to trigger a massive bull run in the price of XRP (XRP) going into the future. The demand that financial institutions will create could an epic bull run for XRP, one that takes it to the top spot in crypto rankings. The future is great for DLTs in the cross-border payments market.