XRP's Role as Global Reserve and Bridge Currency

Crypto enthusiast Edward Farina highlighted the map in a post on the social media platform X. The map describes how coins like XRP can serve as a global reserve asset, with gold as an essential anchor. As a result, it challenges the long-running discussion surrounding gold as the cornerstone of a stable monetary system.

Gold has historically been seen as a reliable store of value and a hedge against inflation. However, its role in modern finance is increasingly being viewed through the lens of digital transformation.

The map outlines a tiered structure for global currencies. At the top of the rank is the SDR, an international reserve asset developed by the International Monetary Fund (IMF). Next on the rank are Tier 1 currencies, which may include the U.S. Dollar, Euro, Japanese Yen, and others from top nations.

Beneath these are Tier 2 assets encompassing Central Bank Digital Currencies (CBDCs). These assets would be connected to the currencies of different countries and issued by their central banks. This means bridge currencies like XRP can facilitate conversions and transactions between these government-backed digital currencies, allowing them to interact seamlessly across national boundaries.

The map implies that XRP could help speed up the conversion of other CBDCs. This expectation is based on the digital asset's ability to provide liquidity and reduce friction in international transactions.

XRP's role as a bridge currency was accelerated during COVID-19 due to difficulties in making cross-border payments. At the time, Ripple's head of global banking, Marjan Delatinne, said XRP is well positioned to bridge multiple or different CBDCs.

XRP's role as a bridge currency is crucial due to the multiple digital currencies that are used globally. XRP can help ensure interoperability between these digital currencies for efficient global commerce.