Ripple Exec Challenges Central Banks: Embrace Regulated Stablecoins Now

Forget waiting for central bank digital currencies—a top Ripple executive is calling for regulators to back regulated stablecoins instead. The push comes as traditional finance scrambles to catch up with blockchain's speed.

The Case for Private Innovation

Why build a CBDC from scratch when the private sector already has the rails? That's the core argument. Regulated stablecoins—pegged to fiat but running on decentralized networks—offer instant settlements and global reach. Central banks could oversee them without reinventing the wheel.

Bypassing the Bureaucracy

CBDC projects move at a glacial pace, bogged down by committees and legacy systems. A regulated stablecoin framework would let existing financial players plug into crypto liquidity overnight. It's a shortcut to modernization that cuts through red tape.

The Regulatory Tightrope

Balance is key. Too heavy a hand stifles the efficiency gains; too light risks the very instability regulators fear. The proposal demands clear rules on reserves, audits, and issuer obligations—turning volatility into predictability.

Finance's Ironic Twist

Here's the kicker: the same institutions that once dismissed crypto now need its technology to stay relevant. Adopting regulated stablecoins isn't just an upgrade—it's an admission that the future of money was built outside their marble halls. A little humble pie for finance, served on a blockchain.

Ripple Exec: Bring Stablecoins Into The Safety Net

At the centre of his case is the claim that stablecoins should be treated as an incremental evolution rather than an adversarial replacement. “Regulated stablecoins could play a key role in financial markets alongside other forms of money,” Osborne wrote. “First, stablecoins are more likely to complement the existing financial system than replace it. This is evolution, not revolution.” He then added: “The solution lies in central banks channelling stablecoin momentum, not fighting it.”

Osborne argues central bank money will remain essential as a risk-free settlement asset and SAFE store of value, but its relative role could shift in digital markets. He pointed to atomic settlement, where legs of a transaction settle simultaneously and conditionally, as reducing the traditional need to use central bank money purely to mitigate settlement risk.

Where stablecoins could be structurally preferred, he wrote, is in cross-border flows and multi-chain markets. “Cross-border payments are one example, given that stablecoins can MOVE value anywhere in the world in seconds,” the Ripple exec said.

“In contrast, central bank money is likely to be less suitable for cross-border payments given access may be geographically limited and adoption of on-chain central bank money is far from universal around the world.” He also argued stablecoins are likely to exist across more blockchain networks than central bank money, making same-chain settlement between tokenized assets and cash more achievable while interoperability remains uneven.

Central banks have repeatedly warned that stablecoins could pull funds from bank deposits, weakening bank credit creation and potentially amplifying stress events. Osborne pushed back, arguing the risk is overstated because markets already accommodate instruments backed by highly liquid assets, money market funds, e-money, and “narrow banks”, without causing sustained deposit runs.

His bigger point is that regulation, while necessary, is insufficient without a backstop. “But regulation alone is not enough,” Osborne wrote. “Stablecoin issuers lack access to the safety net that gives bank deposits their resilience. Without it, even well-managed stablecoins are more vulnerable to shocks – as seen when USDC temporarily lost its peg following exposure to Silicon Valley Bank in 2023.”

He argued central banks should consider extending elements of that safety net, including allowing well-regulated stablecoin issuers to hold part of their backing assets in central bank accounts, offering liquidity insurance against market-wide shocks, and granting more direct payment-system access to reduce tiering risk.

The Ripple exec closed by positioning the choice for central banks as strategic: resist stablecoins and risk the market scaling beyond official influence, or “bring them inside the tent,” shaping development through prudential oversight and infrastructure access as tokenized settlement rails mature.

At press time, XRP traded at $1.9216.