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Ripple and XRP Can Cut Banks’ Global Settlement Costs Up to 60 Percent

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Ripple: Distributed Ledger Tech Can Save Banks 42% on Global Payments

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Ripple has projected that banks that use the Ripple network and its native cryptographic token XRP for cross-border payments can save up to 42% when compared against today's options.

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Further, the report projects respondent banks using Ripple without XRP can save 33% on international payments, with savings being generated by a 65% reduction in liquidity costs, a 48% drop in payment operations costs and a 99% decline in Basel III compliance costs.

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Support for XRP

Perhaps most notable about the report is its implications for XRP, the cryptocurrency that is used to facilitate trades on the permissioned Ripple DLT system and that trades on an open market on digital currency exchanges.

More recent Ripple announcements have found the company largely glossing over the role of XRP in its system. For example, the Interledger protocol, released in October, sought to create a way to exchange funds between ledgers without a "digital asset", as it is described in the report.

Like bitcoin and other digital assets, XRP is a store of value that can be transferred between parties anywhere in the world without a central counterparty. However, Ripple stresses that XRP can also support liquidity between any two currencies, acting as a bridge asset.

Instead of holding local currency in many accounts around the world, banks can instead bring their liquidity for global payments into just one XRP account, the paper argues.

"This singular XRP pool then allows respondent banks to allocate less total liquidity to service the same volume of international payments," Ripple writes.

Further, this process allows banks to minimize the number of intermediaries involved and their markup on spread, it says.

As a result, claims Ripple, respondent banks that use the Ripple network with XRP as a bridge currency can save up to 42% on costs today, and potentially up to 60% as XRP gains usage and volatility decreases.

As for whether bitcoin and other blockchain platforms can provide similar savings, Ripple says that's a "different story".

 

 

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The white papers link: https://ripple.com/files/xrp_cost_model_paper.pdf

There is a  XRP for MM white paper coming soon.

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Catalyzing Competitive FX Markets:

Ripple’s XRP Incentive for Market Makers

This paper introduces Ripple’s XRP incentive program for market makers who use XRP to offer tighter FX spreads.

 

 

Edited by Mercury

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14 minutes ago, Phintech said:

Wow.  That's pretty big for Coindesk.   I guess they're finally realizing that the world will not revolve around btc and they better evolve with the industry or die.

 

http://techcrunch.com/2016/01/13/coindesk-acquired-by-digital-currency-group/

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CoinDesk, one of the leading bitcoin news sites, has been acquired by Digital Currency Group according to a post on the company’s site. A source close to CoinDesk tells TechCrunch the price of the deal was around $500-600k.

 

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Ah, did not know that. Makes more sense then.  

That's a steal IMO.  If done correctly and fintech really does grow as projected, that media property could easily be worth 10x that in a short period.

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This article might also be an indication that something is moving @SWIFT  and why Ripple is becoming more aggressive in promoting XRP/Ripple as best of bread. SWIFT also has to gear up, and I guess they know it, because if they don't go fast enough, others will take it over (Earthport doing already, OK modest and partly right now - but what is small today can become huge some other day).

In my view, SWIFT was, is and will (want to) continue being a key player in international value moving and they have 3 options if they want to innovate in DLT direction:

1) A private & tokenless DLT based system (like HyperLedger)
2) Step into an existing more open/public DLT system - tokenized for efficiency - Ripple being the only ready right now, not only the network but also the team.
3) Develop (fork?) a brandnew Ripple-like system where SWIFT will issue the tokens

What Ripple now basically is promoting is that their system is much cheaper than the first option. So even if SWIFT might go for a private solution, if Ripple has it right, SWIFT might face in the long term hard competition by letting grow a public based and much cheaper alternative that is not under their controls. The third obviously being a disaster outcome for Ripple, but I doubt that SWIFT will go for that option, in the first place to avoid their very own "distribution problem"

 

 

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Love to see incentives being put in place 

 

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To accelerate market thickness and reduce volatility for XRP, Ripple will soon introduce an XRP incentive program to algorithmically rebate market makers who provide liquidity through XRP.

 

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1 hour ago, Mercury said:

The white papers link: https://ripple.com/files/xrp_cost_model_paper.pdf

There is a  XRP for MM white paper coming soon.

 

Yeah looks like they've updated their XRP Portal page with this too:

https://ripple.com/xrp-portal/

Much more clarity. Can't wait to see that upcoming paper.

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14 minutes ago, cmbartley said:

Which makes this article more propoganda than news sadly... Ripple needs to be careful about how they promote XRP...

Don't know if one has to read desperation in it. I feel it more like this is the right time to play the better cards. Lots of FI's may have conducted testing and POC's and are ready to make their a decision. Besides the technicals, scaling, etc... there's also the commercial economic checkings. It's good from Ripple to counter some emotional drawbacks agains XRP by pointing to the nice advantages it holds.

And there IS some news in the post that I read as one of the best in more than a year: they finally have a plan to gear up liquidity.

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I really like the multiple benefits of holding xrp listings. Besides the standard currency hedging and liquidity they also mention treasury operations and Basel III benefits.

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● Treasury Operations: The funding cost required to maintain account minimums, the overhead of managing currencies and counterparties across accounts, and the
cost of occasionally rebalancing cash between those accounts 7 locally and internationally.
● Payment Operations: The manual intervention cost of exceptions and error handling requiring headcount and the cost of using local rails.
● Basel III (LCR)8: The opportunity cost to the sending institution of holding lower-yielding, high-quality liquid assets (as designated by pending Basel III regulations) against credit exposure during the in-flight period.

I also like how they address potential volatility.

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This model includes a conservative assumption of hedging costs with initially high volatility of XRP. However, institutional holdings and active trading of XRP can greatly
reduce the volatility of XRP, significantly lowering the hedging costs. In a low volatility state, assuming the volatility of XRP is the same as that of a basket of liquid global
currencies, costs can decrease an additional 3.8 bps ($10 billion system-wide)21 or 60 percent compared to the current system, translating to total system-wide cost savings of over $33 billion annually with lower volatility of XRP.


 

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