Federal Reserve Use of XRP Globally

The Federal Reserve’s use of XRP can be seen as a bridge between traditional buttoned-up suit-oriented finance and crypto bro decentralized versions of finance that have taken the world by storm over the past decade. The growing use of XRB for institutional liquidity, cross-border settlement, and CBDC pilots is becoming so prevalent that no one can “not notice’. So does this mean that the Federal Reserve has completely embraced cryptocurrency? Not exactly, let’s break it all down below.

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What is XRP, and how does it work?

XRP is a cryptocurrency developed by Ripple Labs that functions as a bridge asset in Ripple’s payment network, RippleNet. Unlike most cryptocurrencies that focus on decentralization and anonymity, XRP was designed to integrate with the financial system, not replace it. This has made it popular with institutions and controversial among crypto purists.

If a bank in Peru wants to send money to Japan, it can convert Peruvian Soles into XRP, and move that XRP then into yen. In that sense, it competes directly with the SWIFT system, which is the US-backed global system of cross-border financial transactions and settlement.s

Ripple vs SWIFT: A speed and cost comparison

Before we dive into speculation about XRP and the Federal Reserve, it’s important to understand the real-world problem Ripple is trying to solve, and that involves getting a bit more in-depth into the existing network.  SWIFT is a decades-old messaging network that’s slow, expensive, and heavily reliant on intermediaries. Ripple offers a fundamentally different approach. Here’s how the two stack up:

This efficiency has made XRP a potential game-changer for a financial system long burdened by delays, fees, and reconciliations.

Is the Federal Reserve actually using XRP?

Let’s make one thing clear upfront: as of mid-2025, the Federal Reserve has not directly adopted XRP in any official capacity. There are no contracts, memorandums, or pilot programs confirming XRP’s integration into the Fed’s operations.

But it’s not quite that simple.

The Fed is exploring digital infrastructure that mirrors the problems Ripple is solving. While XRP isn’t in the Fed’s toolbox (yet), the tools built around it—like RippleNet, CBDC ledgers, and instant settlement tech—are moving into institutional circles, many of which overlap with Fed partners.

FedNow, RippleNet, and indirect overlap

FedNow, the Fed’s real-time payment system launched in July 2023, was designed to modernize domestic transfers. It’s not blockchain-based, nor does it use XRP. However, some of its integrated institutions—including Bank of America and PNC—are active Ripple partners.

This opens the door to interoperability, where RippleNet handles international legs of a transaction while FedNow settles the domestic portion in real time. In effect, while the Fed isn’t “using XRP,” some of its connected banks are using tools that do.

CBDC research and Ripple’s quiet influence

The Fed’s Digital Dollar Project and Project Hamilton (in collaboration with MIT) are still in research phases. However, Ripple has been offering ready-made CBDC infrastructure to smaller central banks. By 2025, more than a dozen monetary authorities have piloted Ripple’s technology for sovereign digital currencies.

Ripple’s pitch? You don’t need to build a CBDC from scratch. Use our private XRPL solution with modular compliance and settlement options.

Ripple’s global expansion strategy

Ripple has shifted from a U.S.-centric crypto firm to a global financial infrastructure company. Its partnerships increasingly involve foreign exchange corridors, commercial banks, and central banks.

Major RippleNet partners (as of 2025)

Why XRP matters to central banks

Central banks are grappling with one of the most important design challenges of our time: how to modernize payment systems without compromising stability, control, or monetary independence. As they explore cross-border payment upgrades and central bank digital currencies (CBDCs), they run into the classic trilemma:

• Speed – End-users demand instant payments, but legacy infrastructure often can’t deliver.
• Interoperability – CBDCs must work across borders and systems without introducing friction.
• Monetary sovereignty – No central bank wants to hand control to a third party, especially not a foreign government or unregulated tech company.

XRP’s unique value proposition is that it helps solve this trilemma by acting as a neutral, decentralized bridge asset. Unlike using USD or EUR as a settlement currency, which can come with geopolitical baggage, XRP operates independently of any single government. It can bridge currencies in real time without requiring pre-funded accounts or relying on multiple intermediaries.

How XRP could serve CBDCs

While CBDCs are typically issued and controlled by a single country’s central bank, they need to interact with one another to be effective in a globalized economy. This is where Ripple’s infrastructure, and XRP in particular, comes into play. Here are three primary use cases where XRP could support central banks without threatening their autonomy. This isn’t like retail traders who use crypto mainly for trading on platforms like Webull Crypto and Etoro; this is for institutional monetary infrastructure.

1. Bridge currency between digital sovereign currencies

A classic problem in international payments is converting from one fiat currency to another. In traditional systems, this often requires multiple hops: from currency A to USD (as an intermediary), then to currency B. XRP streamlines this by allowing direct, instant conversion via the XRP Ledger. Instead of relying on the U.S. dollar, central banks could use XRP as a neutral intermediary, cutting down on delays and foreign exchange spreads.

2. Settlement layer for synthetic CBDCs

Some countries are exploring synthetic CBDCs, where commercial banks issue digital currency backed 1:1 by central bank reserves, but the infrastructure is managed by private companies. Ripple has positioned itself as a white-label provider for these systems, offering central banks a plug-and-play settlement engine based on the XRP Ledger. This allows governments to deploy advanced financial rails without having to build everything from scratch, critical for smaller or resource-constrained economies.

3. FX conversion layer for regional stablecoins or tokenized assets

Even if XRP isn’t used as the actual currency in a transaction, it can be used in the background as a liquidity rail. Regional CBDCs (like a digital euro or digital yuan) could convert into each other via XRP without holding foreign reserves. This FX functionality is especially relevant in Asia and Africa, where stablecoins and CBDCs are emerging in fragmented ecosystems with limited USD access.

XRP vs other players in institutional finance
The financial world is getting crowded with digital assets promising efficiency, compliance, and scale. To understand XRP’s niche, it helps to look at how it compares to its closest competitors:

Analysis

• Stellar (XLM) is closest to Ripple philosophically but targets micro-transactions and NGOs more than banks. Its open governance is a double-edged sword: more transparency, less control.
• JPM Coin is effectively a tokenized cash system for JPMorgan’s clients. It’s fast but siloed—great for internal use, irrelevant outside JPM’s network.
• USDC shines in transparency and fiat peg, making it ideal for U.S. dollar-based DeFi and B2B payments. However, it’s dependent on banking partners and lacks independent liquidity.

XRP’s strength lies in being liquid, decentralized, and deeply integrated into institutional infrastructure. While not as stable as USDC or as programmable as Ethereum-based tokens, it sits in the sweet spot for banks that want low-cost, high-speed liquidity with regulatory clarity.

What would real Fed engagement look like?

While the idea of the Federal Reserve “using” XRP is still speculative, there are several realistic ways Ripple’s infrastructure could touch the Fed’s operations without requiring direct endorsement or integration. These scenarios hinge on market forces, interoperability goals, and evolving global payment standards.

Liquidity provisioning through Fed-connected banks

Ripple partners like Bank of America and Citi are already tightly integrated into the U.S. banking system, including access to Fed services like Fedwire and the newly launched FedNow. These banks could use XRP behind the scenes to manage global liquidity for clients, especially in FX-heavy corridors.

Here’s how it might work:

• A corporate client needs to pay vendors in Asia.
• The U.S. bank uses FedNow for the domestic leg.
• Then routes the cross-border payment via RippleNet, using XRP to bridge currencies.
• Final settlement in local currency happens within seconds, while the bank reports the final net balance to the Fed.

In this model, the Fed never touches XRP directly, but its infrastructure is indirectly supported by it.

FX interoperability between the digital dollar and other CBDCs

Let’s say the U.S. eventually launches a digital dollar (eUSD), and it needs to settle with other CBDCs like the digital euro, yuan, or peso. Interoperability becomes key.

Ripple has already built CBDC infrastructure with FX functionality. Through tools like the Interledger Protocol (ILP) and native XRP liquidity pools, XRP could become the middleware enabling these digital currencies to communicate and settle value instantly, even if the Fed doesn’t hold XRP reserves.

This scenario becomes more plausible if:

• The U.S. adopts a wholesale or synthetic model for the digital dollar.
• Ripple’s CBDC technology is adopted by enough foreign governments to become a standard.

BIS-driven interoperability pilots

The Bank for International Settlements (BIS) has become the neutral ground for cross-border CBDC experimentation. Initiatives like Project Dunbar and Project Icebreaker have already tested how digital currencies can work across jurisdictions using private-sector rails.

Ripple has participated in CBDC forums and panels with BIS officials. If BIS chooses Ripple’s tech stack for pilot projects—and some already suspect it might, then the U.S. could become exposed to XRP infrastructure through multilateral coordination, not unilateral adoption. This is a credible path to XRP inclusion, especially if the U.S. wants to influence global standards without having to take an ideological stance on public vs. private tech.

FAQ

How does XRP maintain liquidity across global markets?

XRP’s liquidity is supported by a network of on-demand liquidity (ODL) partners, including crypto exchanges, financial institutions, and remittance services. These entities continuously buy and sell XRP to facilitate real-time FX settlement. Because XRP transactions settle in seconds and cost less than a penny, it provides a viable alternative to pre-funded accounts in low-liquidity corridors. This efficiency also makes it easier for financial institutions to manage currency risks.

Is XRP’s price volatility a risk for institutional adoption?

Yes, volatility is a consideration, but Ripple’s infrastructure minimizes exposure by using XRP as a bridge currency only for a few seconds during a transaction. This drastically limits market risk while still delivering speed and cost benefits. Additionally, as XRP becomes more integrated into institutional systems and liquidity deepens, volatility is expected to decrease. For most enterprise use cases, the utility outweighs the short-term fluctuations.

Could XRP face regulatory headwinds again in the U.S.?

While Ripple won a partial victory against the SEC in 2023, regulatory uncertainty hasn’t vanished completely. U.S. lawmakers are still drafting comprehensive frameworks for digital assets, and future administrations could take a more aggressive stance. However, Ripple’s legal clarity, proactive engagement with regulators, and international expansion have positioned it more favorably than many other crypto projects. Institutional investors are watching these developments closely when assessing XRP’s long-term viability.

Benjamin Locke

Benjamin writes about finance, real estate, business, economics and most things business or investment related, for publications such as The Motley Fool, SuperMoney, and Joy Wallet. Hailing from Denver, Colorado, he spent 15 years in East Asia heavily involved in both the financial services and real estate industries. He enjoys writing about all the interesting ways this great spinning ball that we call earth works; particularly when it comes to the intersection of business, trade, finance, and history. Read Full Bio