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There Is No Such Thing As "Dormant Funds" In Banking

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https://www.investopedia.com/terms/n/nostroaccount.asp

       Let us say bank A needs to transfer money to Canada. Banks B is a Canadian bank. At some time Bank A has an account at Bank B in the form of a Nastro account at Bank B (From Bank A's perspective). From Bank B's perspective it is a Vastro account for Bank A. The money that resides at Bank B for bank A is in the Canadian Dollar. Bank A must hold Canadian Dollar at Bank B so that when a customer transfer money to Canada that money is removed from Bank A's account in Canada. Then Bank A must replenish that money to Bank B for future transfers. Bank B would have the same relationship with Bank A. XRP by design is to relieve corresponding banks of liability to the money of another countries bank. This also allows for the independence of a nation's currency, while maintaining an easy or easier method of the transfer of money. I think the savings in fees is due to the savings in liabilities across borders.

Under the definition of Nostro/Vostro accounts they are not equal to zero as they are the same account just named differently depending of the perspective of which bank is holding the money. Bank B is not required to hold its money in the account of Bank A. Therefore Nastro account is equal to a Vastro account as they are the same account meaning that the value is equal to zero when the account itself is zero which would make useless.

I think the whole idea of Xrapid and XRP is to relieve the liability of foreign currencies being held in an account. Bank B is no longer liable for Bank A, and Bank A no longer has to rely of Bank B to be trustworthy, bank A and Bank B can transact without trust as long as a market exist where a neutral exchange can take place. The trust then goes away from bank A or bank B and transfers to the maintenance and security of the network. That is the incentive for running validators without reward in order to safeguard the ecosystem as the trust is in the security of the ledger and not of politics of money and governments. It is actually quite beautiful to think that actual integrity will be required to insure the security of money.  

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1 hour ago, cmbartley said:

The truth may be somewhere in the middle but not being a banker I'd like some clarity. 

I would agree. By using USD and EUR in the article the n/v might not seem such a bad solution for banks. I'm interested to know what banks think of funding n/v accounts with BHT, MXN or other less stable/desirable/profitable currencies. 

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Just now, peanut56 said:

I think the whole idea of Xrapid and XRP is to relieve the liability of foreign currencies being held in an account. Bank B is no longer liable for Bank A, and Bank A no longer has to rely of Bank B to be trustworthy, bank A and Bank B can transact without trust as long as a market exist where a neutral exchange can take place.

Exactly.  And then the money they held overseas can be repatriated and also some of it used as part of their capital requirements which are now higher under Dodd/Frank is my understanding.  Maybe a banker in the midst  can clarify.

Regardless- this piece and her rude demeanor (check her twitter account) tell us all about WHO she is, which is an uncivil person and jaded journalist. 

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1 minute ago, LordVetinari said:

By using USD and EUR in the article the n/v might not seem such a bad solution for banks. I'm interested to know what banks think of funding n/v accounts with BHT, MXN or other less stable/desirable/profitable currencies. 

Agreed.  Was XRapid and XRP ever intended for the most highly liquid corridor in the world?  I don't believe that Ripple ever touted this in the marketing brochures.  But of course she uses this as example.  Intellectually dishonest again.

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There some serious money been made in the status quo! 

 

"Importantly, remittances are a very profitable business for large operators. Western Union, for example, completed 268 million customer-to-customer transfers in 2016, with a value of $80 billion. Total revenue for the year exceeded $5 billion, with net profits surpassing $250 million.3"

.."with the global average cost of sending $500 at just under 5% (World Bank 2017b). Even so, the aggregate cost of sending remittances in 2017 was about $30 billion, roughly equivalent to the total non-military foreign aid budget of the US!"

UK businesses overcharged on foreign currency transfers

A study has revealed that UK SMEs were overcharged £4,078,000,000 in 2015 while paying for products, services and talent abroad. This cost has risen by almost a billion pounds over the past five years as UK SMEs become increasingly global.

More than half of SMEs that transfer money abroad only use their business bank account to make the payments. However, the banks continue to charge a premium on foreign money transfers.

 

 

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2 hours ago, lucky said:

Good question. What could possibly motivate someone to join forces with an anonymous blogger to save the billion dollar correspondent banking cashcow from Ripple by launching a classic coordinated campaign to spread Fear, Uncertainty and Doubt?

Could it be a big fat cheque?

I think she's a hardcore feminist, simple as that...

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I can tell she is a beginner in crypto.

She brought out many of the typical beginners’ questions.

The problem is she believes she is better informed  just because she worked for banks and  treats xrp investors as ignorant dumbs and dumbers. 

She made me laugh when she said that nostro vostro is mirrors therefore they are equal to zero and don’t exist. 

I don’t know where to start to arguement because every point she made is so wrong and illogical. 

Ripple is designed to achieve automated realtime international payment with near zero fee, which current system can never achive.  Without decentralized digital asset, making a automated cheap instant global payment is impossible. Middle man must be eliminated in order to reduce the payment friction.  She doesn’t seem to acknowledge this business model and need for innovation.  And claims “ripple is trying to solve a problem that doesn’t exist!”

OMG just leaves me speechless with her stupidity... just wow

 

 

 

 

 

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Central banks are in charge of how much of a given currency is in existence. They need to issue those "serial numbers" to the banks keeping the nostro/vostro accounts. Exchange rates/inflation/deflation comes from the fact that the central bank is in control of how much of the currency is in existence at any given nanosecond. This is what the wheelbarrows in the Weimar republic was all about, "keep printing, the money will catch the debt sooner or later, right?"

The serial number have to EXIST the moment the exchange is being carried out, then the SETTLEMENT comes in, if that takes 3-5 days, money is in LIMBO and dormant. This is expensive for the often smaller banks holding the risk, but extremely lucrative for the big banks with many offices around the world keeping the destination accounts.

Every day money simply disappear while being transferred, she can not claim that these serial numbers never existed in the first place, that would be counterfeiting.

https://economictimes.indiatimes.com/industry/banking/finance/banking/after-a-2million-swift-hiccup-rbi-demands-focus-on-nostro-accounts/articleshow/63007468.cms

SWIFT themselves say private banks do no want to disclose how much they keep in these accounts.

Edited by mandelbaum

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21 minutes ago, mandelbaum said:

Every day money simply disappear while being transferred, she cannot clam that these serial numbers never existed in the first place, that would be counterfeiting.

I agree, if I have a bag of five oranges and I give that bag of oranges to Bob he now has five more oranges and I have five less oranges but according to her logic between us we have no oranges.

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1 hour ago, Trickery said:

I agree, if I have a bag of five oranges and I give that bag of oranges to Bob he now has five more oranges and I have five less oranges but according to her logic between us we have no oranges.

I didn't really follow the zero-ing either. I though she was saying, Bob has 5 oranges in the US and 5 apples in the UK. Apples and oranges zero each other out. Either way I still don't get it. 

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6 minutes ago, LordVetinari said:

I didn't really follow the zero-ing either. I though she was saying, Bob has 5 oranges in the US and 5 apples in the UK. Apples and oranges zero each other out. Either way I still don't get it. 

Yeah I did contemplate using apples as well as oranges but at the end of the day it would be fruitless :crazy:

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