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Stablecoins and Banks


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Hello, 

Long time reader first time poster. By way of an introduction, I work for a large UK bank focusing on Trade Finance. As such I have a solid knowledge of the problems in International payments that Ripple are trying to solve. 

Today we had a meeting to discuss the future of trade services tech. During the presentation several R3 projects were discussed (Voltron & Marco Polo). I couldn't resist asking about IP and if Ripple/XRP was in the banks plans. He was of the impression that banks will build their own shared private DLT supported by a universal DA/Stablecoin to facilitate money movements. Ultimately they will present this tech to Swift and charge them with the maintenance of said ledger thus keeping the status quo intact  I know there's been some threads of similar nature but I wondering what the consensus is on this? 

Edited by Stellios
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Yes! this is exactly what I was saying... Thanks @KaaKaRmA for this link  Brad Garlinghouse from the article: "Scenario one: all banks around the world put aside competitive and geopolitical

That sounds like something a bank chief techie may actually say.  It's a great idea in principle, but in practice banks are not software development shops nor do they have the ability to keep up with

Many will try to build their own, as they think it’s a simple solution. Reality is Ripple and XRP are disrupting the industry, which isn’t always a good thing. The battle Ripple and XRP face is twofol

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36 minutes ago, Stellios said:

He was of the impression that banks will build their own shared private DLT supported by a universal DA/Stablecoin to facilitate money movements.

This has already been done on a much larger scale by Ripple using XRP, IMO banks in pursuit of this goal are far behind what is already in motion...

Creating more and more "stablecoins" just replicates the original issue ie holding/tracking many different currencies. Creating more DAs just muddies the water.

Try searching "walled garden" for previous discussions?

Edited by GiddyUp
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Nobody knows man. There's a lot of banks around the world, what they decide to do is anyone's guess. 

 

I do know it would take significant capital to acquire Ripple, more than any bank would be willing to pay currently.  And as far as I can tell ripple has no intent of selling. 

Edited by Konan45
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Yup, after Davos, I kind of expected a bunch of people to go home with the "we'll build our own!" idea...  It'll take them a minute to realize counterparty risks and scale issues.

Hopefully they don't waste too much time/money on that.  Also, you might not wanna volunteer to be on that team, if you'll take the hit when he figures out it won't work.  :rolleyes:

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From what I'm seeing in the payments ecosystem what you are describing is likely the route the very largest correspondent banks will take.  These banks stand the most to lose with Ripple gaining market share.  What VanGogh just mentioned above though is playing out before our eyes with the thousands of banks bleeding fees to the largest correspondent banks such as Citi.  My realistic hope is that in 5-6 years 50+% of cross border payments are facilitated through RippleNet and XRP.  Of course, even grabbing 5-10% of this market would be an incredible win for those holding XRP in the long-term.  

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Thanks for the input guys. I'm glad it's opened up a healthy discussion.The work we are doing with R3 around trade finance is in quite an advanced stage.

If agreeing and implementing a universal DA is too big of a task. What's to stop a consortium of big banks of buying Ripple? Taking the infrastructure off the grid and rebadging XRP as the settlement token? 

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The only question I have about banks creating their own currencies and using them for everything without touching cryptocurrencies.... Is.... How will they get their liquidity?

Without a liquidity pool, a global market buying and selling a currency, banks will be back to their prefunded digital nostro accounts.  Which in the end doesn't solve the problem. So It's all fine and dandy that banks create their own coins, but where will the liquidity come from? If they can't provide their own liquidity pool for all corridors around the globe, then, they're gonna need a coin like XRP. XRP can get instant liquidity anywhere, thus no friction no matter where you want to send money to/from. 

So my question stands.... How will banks get their liquidity for their own digital currencies?  If someone comes up with an answer that scares me... I'm selling my XRP lol

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