XRP-Powered Bank Explores Ripple Technology for Bonds, Derivatives and Foreign Exchange Contracts
The first bank to officially adopt Ripple’s XRP-based cross-border payment solution xRapid says it’s just getting started.
Euro Exim Bank’s head of compliance and operations, Graham Bright, told BloxLive TV that the company is exploring how it can use Ripple’s suite of payment technologies to power contracts for instruments like bonds and derivatives.
“Where we’re also moving with this from a fintech point of view is, how can we take our journey even further forward with Ripple. Not just from the payment perspective. Not just from the use of the digital asset. But perhaps we can also – and that’s what we’re investigating at the moment – is how we can embed instructions for bonds, derivatives, foreign exchange, inside a Ripple message so that we can actually put the whole of the contract point for a particular trade or a buy or a sell for a particular commodity inside a Ripple message as well. So it not only carries a payment instruction, but also the underlying contract’s detail as well.
Now if we could do that, that means the whole of the ecosystem of trade would not be based on 90 days and hoping somebody pays at the end of the time, but have a defined, absolute exact way of working, tracking, transparency, immutability of the data which is held for every transaction. Because to be fair, trade finance has in the past had a reputation of a lot of fraud going on. There are fake documents. There are bills of lading. There’s release of goods. There are criminals that are trying to sabotage trade all the time. And what we’re trying to do is ensure that every buyer is safe, every seller is safe. And every institution as part of the ecosystem is able to understand where their payment is, where their goods are, how those goods are being put together and all the matching documents that need to go within that environment.”
Bright says Euro Exim also plans to launch one of the world’s first bank-backed cryptocurrency exchanges, which will let users buy and sell XRP and other crypto assets. It would follow in the footsteps of SBI Holdings’ VCTRADE in Japan.
“We are very advanced in the technology that we use and we’re very anxious to ensure that we’re ahead of the game… To the extent that we will also be announcing a crypto exchange in the coming months.
Now that means that it’s not just Ripple and XRP which is going to be traded there, but other digital assets as well. So we’re very forward-thinking from that point of view, but our core business is trade finance.”
According to Bright, Euro Exim is particularly interested in xRapid as a means of freeing capital for institutions and retail customers, allowing them to move funds directly instead of having to store capital in various bank accounts around the world.
“There’s a traditional banking model which says that every currency you need to move into, you have a nostro account or correspondent account in that country, and you have to transfer or debit and credit an account in that particular country. Which means you’re holding many different relationships in different jurisdictions.
What we’ve done with cryptocurrency, and Ripple in particular, is to be able to look at liquidity levels for each of those particular currencies and only have one unique currency we need to switch into, which is XRP. And that means immediately the cost of doing these transactions is reduced.
We’re looking at a ubiquity, a spread, that we can go to any country and not have to hold their particular currency in order to provide a service to their local SMEs who are trying to do trade business. So that has a number of unique benefits. For us it means, again, the holding of correspondent relationships is expensive and we don’t need to do that anymore. On behalf of our customer, we can pay away in local currency and they can pay their supplier very easily without having to hold another currency as well.”
You can check out the full interview here.