Ripple is revealing new insight on the company’s primary use case for the digital asset XRP.
The company’s managing director for Southeast Asia, the Middle East and North Africa, Navin Gupta, says it won’t be long before countries begin launching their own digital currencies. However, he believes those digital forms of fiat currency will be used for domestic purposes.
When it comes to moving those currencies across borders, Gupta says Ripple’s XRP-powered On-Demand Liquidity platform is the ideal solution. ODL is built to give financial institutions a way to quickly convert their fiat to XRP, where it is then sent to a corresponding country and swapped right back into fiat.
“Because digital currency will be sovereign in nature, its primary use case would be, I speculate, domestic. So if it’s domestic, it will still need a bridge when it goes to Thailand, when it goes to Laos, when it goes to Cambodia. We are advocates of XRP because it’s suited for cross-border payments – but primarily as a bridge.
So we are not saying that at a domestic level, XRP needs to be used, but when that digital currency from country X needs to be converted either to a digital or fiat currency of country Y, then XRP would be the most efficient bridge to be able to do it because we will be able to do it in real-time. The processing speed is very high and the costs are almost minimal. And in that bridge, there will be huge amounts of efficiency versus the inefficiencies that exist in the current system.”
Gupta says ODL has the potential to give companies a direct and instant way to move value overseas, without having to hold pools of cash in bank accounts around the world in order to facilitate instant payments.
“All this will happen in a few seconds and remove the need of something called pre-funding, or nostro accounts that today institutions have to hold around the world. So our sense is there’s about $5 to $10 trillion of money that is stuck in pre-funded nostro accounts all over the world. The cost of which gets passed primarily to the real customers.
And by using XRP as a bridge, there is no need to have pre-funded accounts because now the settlement happens in real time.”
You can check out the full interview here.
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