UN Agency Cites XRP in Report on Financial Inclusion

August 20, 2019

A 2019 report from the United Nation’s Universal Postal Union (UPU) has surfaced, citing the potential adoption of crypto assets like XRP.

The agency, which coordinates postal policies among member nations, highlights the increasing digitization of postal services around the world, and how digital assets can lower costs for consumers.

“Keeping pace with recent innovations, the UPU is examining the role that distributed ledger technology (DLT), blockchain and cryptocurrencies can play in the postal industry, as well as the role of the UPU and its members in enabling efficient delivery of services.

We find that there are already some examples of Posts around the world leveraging or experimenting with DLT to provide financial and logistics services.”

The report references an internal study showing that 90% of post offices around the world offer some form of financial service, targeting groups that are “typically excluded from the formal financial system,” and highlights XRP as a cryptocurrency that could power instant and low cost remittances.

“With the success and uptake of these products, the Post could explore alternatives such as cryptocurrency-based money transfers.

The Post, leveraging its extensive network of physical outlets, can play the role of cash merchant by exchanging cryptocurrency for fiat currency for its customers. As shown in Figure 1 below, a beneficiary (Person B) receives cryptocurrency (we use Ripple – XRP – as an example), from Person A nearly instantaneously.

Person B then goes to the nearest post office, where he/she is given local fiat currency at the spot rate in cash, or as a transfer to their Post Bank account. This reduces transaction time and cost, though the use of cryptocurrency, where transfers through the XRP network are near-instantaneous. The ability to transact at the nearest post office, often in rural locations, also reduces the opportunity cost for Person B.”

The report analyzes the volatile and speculative nature of crypto assets as a potential hurdle to their mass adoption as a medium of exchange, while also pointing to a role the UPU could play in the global adoption of the new technology.

“Through their presence in rural communities and peri-urban areas, and by leveraging their existing financial literacy programmes, Posts could help make communities and individuals aware of the uses of cryptocurrencies, mechanisms to do so, and the advantages of using digital currencies over paper-based currency, thereby increasing uptake and adoption across a wide segment of the population.”

You can check out the full report here.

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