Ripple CEO Brad Garlinghouse has urged United States regulators “to step up and lean into digital currencies” to avoid falling behind China in the field.
In a tweet posted May 26, Garlinghouse warns that “remaining complacent is actually setting us back,” citing an article suggesting that China’s long-touted central bank digital currency (CBDC) has the potential to unseat the dollar as the global reserve currency.
SWIFT is being outpaced by blockchain technology
U.S. financial dominance currently relies on both the dollar’s status as global reserve currency, and of its control of the Society for Worldwide International Financial Transactions or SWIFT system.
This facilitates messages between global commercial banks regarding payment orders and acts as an intermediary for the majority of cross-border payments. Control of this system gives the U.S. considerable leverage in the ability to apply financial sanctions.
Cross-border transfers of digital currencies do not require the SWIFT system, nor rely on the U.S. dollar.
United States playing catch up
Although it claims to have no scheduled launch-date for its digital yuan, China’s CBDC is currently being piloted in a number of regions.
In terms of a national digital currency, the U.S. is already years behind China, but Garlinghouse believes that a more welcoming regulatory framework toward public digital assets like XRP can help to make up lost ground.
And while a Chinese CBDC would be entirely outside U.S. control, Garlinghouse was quick to stress that XRP is not exempt from U.S. (or indeed global) financial oversight.