Ripple CEO Brad Garlinghouse says the payments startup is pushing to use the crypto asset XRP as the bedrock of an ambitious overhaul of the way money moves across borders.
In a new interview on The Jay Kim Show, Garlinghouse says the current correspondent banking system, which relies in part on the need for banks and financial institutions to hold pools of money in various bank accounts around the world, is cumbersome and outdated.
According to Garlinghouse, Ripple’s XRP-based remittance product, On-Demand Liquidity (ODL), is designed to replace that current model in the long run. Garlinghouse says Ripple is aiming for ODL to take over $2 trillion of liquidity in the current system in the coming years.
“There’s $10 trillion pre-funded in accounts around the world, which is effectively the oil that is facilitating the engine that is correspondent banking. The oil has to be there or correspondent banking won’t work.
Now, if we can reduce the amount of oil, that improves the efficiency of the global economy. So we feel like, bit by bit, we’re going to be able to take that $10 trillion down to $9 trillion, to $8 trillion. This is a journey that will take many years. But we’re incredibly enthused by the progress we’ve made in a relatively short amount of time.”
Ripple created On-Demand Liquidity, formerly known as xRapid, to give banks a regulatory compliant way to move money by using cryptocurrency, which leverages the speed of digital technology secured by cryptography, as a bridge.
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.
Garlinghouse says Ripple’s early experience with MoneyGram, which is moving 10% of its volume to Mexico through its liquidity product, is the start of Ripple’s efforts to build a new financial system around XRP.
“We want MoneyGram to see a dollar-peso quote. What happens in the plumbing of that transaction [doesn’t matter]. At the end of the day, they just want to know the quote. And if [they] can get it at that price, great. Done. Click.
All the customer really cares about is, I need a dollar-peso quote. I need $1,000 moved into Mexican pesos and I need to do it right now.”
Ripple says it plans to expand the number of corridors for ODL, beginning with Thailand and Australia next year.
You can check out the full interview with Garlinghouse here.