Ripple’s XRP remittance platform has the potential to streamline and boost the speed of international payments, according to a new report from a London-based financial think tank.
The Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank for central banking, economic policy and public investment, highlights Ripple’s efforts to position itself as an alternative to financial messaging service SWIFT in a new report on the role of blockchain in banking.
“By consolidating liquidity to service international payments from many, disjointed, international nostro accounts into one XRP pool, respondent banks allocate less total liquidity to service the same volume of global payments.
The bank only has to hold its domestic currency and maintain one account with XRP, with only enough XRP to service its largest expected payment obligation. The process minimizes the number of intermediaries and their markup on spreads.”
The report says Ripple’s crypto-based solution could further benefit banks by allowing them to avoid exchange rate and processing fees.
Ripple released its XRP-centered cross border settlement platform, now known as On-Demand Liquidity (ODL), back in October of 2018. The platform is designed to allow financial institutions to rely on Ripple to convert their fiat currency to XRP and send the digital asset to another country, where it is then converted back to fiat.
Ripple partner MoneyGram is the most high-profile user of the platform and currently moves 10% of its volume between the US and Mexico using the solution.
SBI Holdings, the Japan-based financial services company, recently announced it will test XRP in the $6.6 trillion foreign exchange market to see if it can lower costs and reduce the risk of price fluctuations when one currency is traded for another.
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