- The ISO 20022 standard seeks to handle the interoperability between the existing financial system and blockchain platform. It also seeks to facilitate high-volume cross-border transactions.
- Ripple and Stellar are among the most-preferred blockchain platforms and are conducting several CBDC pilots currently.
The global financial market is changing pretty fast and digital assets continue to have a formidable footprint as of now. However, as one more asset class gets into the mainstream, one of the bigger challenges ahead for regulators and others is interoperability.
As central banks across the world continue their work on central bank digital currencies (CBDCs), regulators have started incorporating the ISO 20022 standard that includes some of the popular blockchain platforms such as Ripple and Stellar.
As we know, ISO 20022 is a global standard for exchanging of electronic messages between financial institutions via the Society for Worldwide Interbank Financial Telecommunication (SWIFT). However, with the greater participation of digital assets in the mainstream financial system, the system is likely to witness a few changes with the inclusion of cryptocurrencies.
The goal of ISO 20022 is to facilitate high-volume cross-border transactions and Key blockchain platforms like Ripple, Stellar, and IOTA can contribute majorly to this. On the other hand, the European Union (EU) transitioned to ISO 20022 last year in November and probably the United States will transition by this year in November 2023.
Let’s take a look into how Ripple and Stellar are likely to contribute to the expansion of the SWIFT ecosystem while being part of the ISO 20022 standards.
Ripple and Stellar Contribution to ISO 2022
Both Ripple and Stellar have been among the preferred blockchain networks for some countries to launch their central bank digital currencies. Ripple has been part of the ISO 20022 since May 2020 and over the last couple of years, it has been building infrastructure that can support CBDCs as well as instant settlements worldwide and at a very low cost. One of the prime examples of this has been the use of Ripple’s DLT solution aka RippleNet.
Now, with Ripple being a part of the ISO 20022, it can allow a wide range of financial institutions across the world to leverage its power. As per the latest reports, Ripple is in talks with nearly 20 central banks for implementing their CBDC projects. Besides, the blockchain startup has already announced projects with Bhutan, with Palau, and others are yet to come.
On the other hand, Ripple also said that it is confident that its XRP Ledger can handle transactions for stablecoins and CBDCs and is ready to handle a big chunk of the $9 trillion digital wallet market.
The Stellar Lumens blockchain is also one of the key contenders in the handling of transactions. Last month in March 2023, the central bank of Brazil announced the launch of its CBDC pilot on the Stellar blockchain. The Digital Real pilot tests are currently happening on the Stellar blockchain and the final launch shall happen by the end of 2024.