Ripple Engages Fed Consultation on OP-1877 Payment Account Pilot

Ripple has officially participated in the United States Federal Reserve’s public discussion process regarding the Reserve Bank Payment Account pilot proposal under Docket OP-1877.

This makes Ripple a part of a select few that are commenting on the potential for non-bank financial institutions to access central bank accounts. Such a consultation may have implications for the interaction of blockchain-based payment systems and stablecoins with the US monetary system.

Ripple Submits Comment to Federal Reserve on OP-1877

Ripple Labs has made an official response to the Federal Reserve Board’s request for information on the Reserve Bank Payment Account prototype.

The proposal focuses on the specific account access needs of entities outside the traditional commercial banking system. The company has based its response on enhancing the safety, efficiency, and resiliency of the U.S. payment system.

The company focused on its expertise in enterprise blockchain solutions, cross-border payments, and stablecoins. Ripple noted that changing account structures will likely reflect the increasing significance of real-time digital finance. This is a submission from the company, not an observation of the changing regulatory environment.

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What the OP-1877 Payment Account Pilot Proposes

The initiative is currently in its exploratory stage. The docket OP-1877 is focused on whether or not the Fed should provide special types of accounts to specific types of non-bank institutions. These types of accounts would provide institutions with the ability to make direct payments on the Fed rails without depending on intermediary commercial banks.

The Fed is considering potential risks, operational controls, and eligibility requirements. Public feedback is an important part of this process, which will shape the potential functionality of such accounts if implemented. Ripple’s response is an important part of this overall policy discussion.

Implications for Ripple and RLUSD Stablecoin

Ripple observed that having access to a Reserve Bank Payment Account can allow the holding of stablecoin reserves directly with the Federal Reserve.

For the RLUSD stablecoins, this can minimize counterparty risk with the commercial bank. It can also make the settlement process more reliable during periods of stress.

Direct access has the potential to increase trust levels in the backing mechanisms of stablecoins. The company stated that this model was consistent with regulatory objectives of transparency and financial stability. However, this would be subject to future regulatory approval.

Potential Impact on XRP and Payment Infrastructure

It also emphasized the potential for direct settlements on Fed rails to improve real-time payment flows. This could also increase the chances of XRP as a bridge asset in the Ripple payment system. The company emphasized that faster settlements are final, thus improving liquidity efficiency.

Although the XRP network did not make any claims of special treatment, it presented blockchain-based systems as compatible with central bank infrastructure. The submission appears to be part of a long-term plan.

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