Ripple VP Outlines How CBDCs Can Improve Financial Inclusion

James Wallis, Ripple’s vice president for CBDC Engagements, has recently elaborated on how Central Bank Digital Currencies (CBDCs) can enhance financial inclusion in a one-minute video.

The Ripple Vice President first underscored that condensing years of efforts to address financial inclusion into a one-minute overview is challenging. Regardless, he broke down the concept, noting CBDC’s roles in simplified payments and credit-building opportunities.

#CBDCs are a powerful innovation that can enable:

💸 Simplified payments
📶 Credit-building opportunities

James Wallis describes how #CBDCs can improve financial inclusion in one minute. pic.twitter.com/4brv5qTZmG

— Ripple (@Ripple) November 18, 2023

Financial Inclusion

Wallis noted that financial inclusion refers to providing financial services to people globally, including the U.S., Asia, and Africa. He mentioned that it specifically targets people with low incomes and no relationship with financial institutions.

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Wallis outlined two main factors contributing to the financial exclusion of specific individuals. He noted the first reason is that they often have very low incomes and lack any pre-existing relationship with financial institutions, resulting in the absence of a credit history.

Secondly, the Ripple VP stated that banks in regions where people are financially excluded are typically commercial entities with shareholders to answer to. Empathically, those banks find it challenging to serve individuals with minimal resources, as generating profits from such a demographic is difficult. 

CBDC Solving Financial Exclusion

However, CBDCs offer a solution. Wallis highlighted that they are cost-effective, allowing financial service provision at a much lower cost compared to traditional methods.

Furthermore, he mentioned that CBDCs allow people to access simplified payment options. Also, it provides opportunities to build credit, even without a prior relationship with a financial institution. 

According to the Ripple expert, it opens the door for individuals to establish credit histories and gain the ability to borrow money, fostering the growth of their businesses. 

Overall, Wallis expressed that CBDCs present a transformative innovation that addresses the challenges of financial inclusion on a global scale.

Ripple CBDC Moves

It is worth mentioning that Ripple is collaborating with more than 20 central banks worldwide for CBDC initiatives. Recently, Ripple emerged as the technology partner to pilot the second stage of the CBDC project in the Republic of Georgia. 

Other countries where Ripple has live CBDC collaboration include Bhutan, Palau, Montenegro, Colombia, and Hong Kong.