A 2023 IMF document includes XRP on a shortlist of technologies that could support future cross-border payment systems.
The organization shared this view in a March 2023 document. report dubbed “Fintech Note, Trust Bridges and Money Flows: A digital marketplace to improve cross-border payments.” discussed Why global payments remain slow and expensive and how digital money will be used present A better way forward.
Notably, this analysis led to XRP being included among the three models that the IMF considers suitable for the next generation of payments infrastructure. This document is over two years old, but has recently resurfaced within the XRP community.
Issues with cross-border payments
At the outset, the report identified serious payment problems. Specifically, he pointed out that international payments depend on weak trust networks built on trust relationships between banks.
By way of background, domestic payments flow more smoothly as central banks provide shared payment assets and a unified platform. However, these benefits disappear once the payment crosses borders.
This is because banks must: create unique bilateral relationship of trust, heavy compliance requestand always evaluate Counterparty risk. These challenges raise fees, slow transactions, and block access to many developing countries.
IMF He then addressed how banks currently move funds across borders. According to them, the two methods currently in use are credit arrangement; where One bank issues a debt note to another bank and makes pre-financing arrangements. where Banks hold liquidity overseas to meet their payment needs.
However, both approaches increase costs and give a small group of large correspondent banks too much control over the system. Central bank swap lines are useful in times of crisis, but they rely on political alignment and trust that many central banks do not share.
Tokenization could help solve the problem
After outlining these issues, the report highlighted the following points: tokenization as a promising alternative. Especially digital tokens pass through shared ledger, allow Transfer ownership instantly without relying on complex interbank credit transactions.
This creates new responsibilities such as verifying publishers, enforcing compliance rules, and managing user identities. The IMF suggests that digital gateways (referring to regulated wallet providers and financial intermediaries) can simplify these tasks by acting as a trust anchor for both issuers and users.
Importantly, this logic leads to the IMF's main proposal: a global digital market where various forms of tokenized money can move across borders and be exchanged between currencies faster and at lower cost.
Such a setup allows users to move funds between currencies as long as the gateway trusts the underlying token. Market makers handle currency conversion and improve liquidity.
XRP as one of three viable models
Within this model, the IMF identified: XRP As one of three possible payment frameworks. This report focused on private payment assets combined with dedicated payment networks, using XRP as the most notable example.
IMF report mentions XRP
The remaining two categories include open-source models like Stellar and models that rely on unbacked crypto combined with a payment layer like Strike, which leverages Bitcoin and the Lightning Network.
that bears to mention The IMF did not especially Recommend XRP or other specific system. Instead, it acknowledged that assets like XRP already operate as payment tokens on dedicated networks and have the potential to be integrated into a larger market for global digital payments.
Besides the IMF, other organizations are also touting XRP's cross-border capabilities. In the report: Major cloud payment company Volante He cited XRP as one of the technologies that will facilitate cross-border payments. At the beginning of this year, IIF called XRP and Ripple It is a viable alternative to existing cross-border payment options.
