Ripple says it’s targeting a trillion-dollar innovation that international remittance rival Swift is leaving off the table.
At Swift’s annual banking and financial conference Sibos, Ripple’s managing director for Southeast Asia, the Middle East and North Africa said the company’s XRP-powered xRapid could help financial institutions and companies bring as much as $10 trillion back home to domestic bank accounts.
If xRapid can achieve global liquidity, Navin Gupta says companies will be able to send money around the world in an instant without having to hold pools of money in various bank accounts around the world.
Gupta says it’s a concept that central banks adore, reports Global Trade Review.
“People are looking at making things faster in their existing correspondent bank network, but nobody is taking away the need for pre-funded accounts. That’s the fundamental value proposition that we are discussing today.
Our guess is that there is about $5 to $10 trillion that is stuck in pre-funded accounts around the world.
This is money which the originating bank has to keep with the beneficiary institution to be able to make the pay-outs. If this US$5-10tn were to be redeployed back into the home economies can you imagine what effect it can have? When we speak with central banks, they love it.”
Ripple designed xRapid to give companies a compliant way to use XRP to move money across borders. The company is partnering with crypto exchanges that can accept fiat from financial institutions and send the equivalent value in XRP to a corresponding exchange overseas, where it’s then converted right back to fiat.
At this month’s OECD Global Blockchain Policy Forum in Paris, the head of Ripple’s global institutional markets team, Breanne Madigan, said Ripple is pushing to get enough liquidity to launch xRapid in new corridors in addition to Mexico and the Philippines.
“And so as we scale xRapid, the on-demand liquidity product, what we now need to look at is before we launched MoneyGram we were looking at the current liquidity of XRP versus USD and XRP versus Mexican peso trading on Bitso at that point. And call it half a million dollars a day. Well, if we want to start sending $10 [million] and then getting to $50 [million] and then getting to $100 [million], how are we scaling that liquidity?
And so we’ve been strategically partnering with a number of market makers around how we establish contracts and incentives for people to want to engage so that as we send more volume through these channels there is depth of liquidity in the crosses that we need to support that flow. But the way that we’ve structured these contracts is such that we leave an opportunity for new liquidity participants to have incentive to enter.
And we’re starting to see already, even in the last month since we launched MoneyGram into that corridor, a number of new liquidity participants are realizing there is a real arbitrage opportunity. We don’t have to then pay to incentivize people to make markets because there’s significant volume going to that corridor. And so, this is a first step in developing real deep liquidity markets in areas that never had it before. And we’re transforming the way money is sent across borders as a result.”
According to two job listings on its website, Ripple is looking to bring xRapid to Brazil and a long list of countries in the Asia-Pacific region.