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

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According to the CLS-Group (https://www.cls-group.com/about-us/shareholders/) who has approximately 50% of the cross border payments market and is arguably more of competitor to Ripple than Swift:

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Global correspondent banking is highly complex, and laden with challenges for banks, corporates and regulators. The current model relies on trust-based bilateral relationships between banks as a method to send or receive payments internationally. Each bank holds an account with the other (a nostro account) and acts to credit funds on behalf of the other bank as its client. The complex nature of this model presents various challenges for banks and the broader industry. It is characterized by significant funding and liquidity requirements, high operational costs and a lack of certainty in the payment delivery process – all of which affects banks’ ability to provide competitively priced, high quality services for their customers. The large number of nostro/vostro accounts held by banks with each other to support a global network requires the effective maintenance of cash balances. Unpredictable transaction volumes can often result in considerable levels of inaccessible liquidity. This under-utilized liquidity exists across many nostro/vostro accounts, resulting in significant costs for banks

Source: https://www.cls-group.com/media/2109/cls_whitepaper_re-imagining_correspondent_banking_190218.pdf.  Furthermore, the authors write:

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These costs are exacerbated by the resources required to administer the network. It requires network managers to review contracts, monitor transaction volume, and ensure AML/KYC compliance for a large number of nosto/vostro relationships. And each bank’s treasury division must manage funding and liquidity, which entails checking cash positions, negotiating rates, purchasing liquid assets and funding the accounts. A lack of global standardized and harmonized rules and practices governing banks and clearing systems causes high payment processing costs, and in some cases, message truncation which requires manual intervention. As message truncation can occur at many points along the payment chain, manual intervention can add hours, or even days, to the transaction timeline. This results in a poor customer experience, higher fees, greater risks and delays in the delivery of payments.Banks’ reliance on a sequential series of bilateral relationships makes payment delivery timelines unpredictable, meaning they often spend hours tracking payments or responding to customer inquiries. Also, unlike domestic payments moving through a central clearing house or central bank RTGS system, there is no legal framework to provide settlement finality in the payment chain.

While I do not work in banking, the nostro/vostro statement, as well as many other statements made by Ripple, are valid.  Many think cryptocurrencies are uniquely positioned to solve these problems, but there are also many who do not.

Edited by Sebastian

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17 hours ago, xrphilosophy said:

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.

Quote from the article: "Provided there are liquid markets in the settlement currency, funding nostros can be done on the day of payment..."

This is a very iffy "provision"...illiquid corridors, a specialty of Ripple and XRP

14 hours ago, automatic said:

[Sibos 2017]...first they laugh at you.... [Davos / Paris Fintech 2019]...then they fight you... then ____________

Free cookie for anyone who can complete that sentence!

"...you win" :D

giphy.gif

Edited by GiddyUp
cookie monster

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5 minutes ago, princesultan said:

Anyone that actually speaks like that literally has no credibility in my books.  

She appears extremely uncurious and hateful to anyone who disagrees with her. That is not at all the right mentality to acquire knowledge and insight into complex matters. That makes me think, either she does not have knowledge, or she's really "doing her job" for which she accepted a handsome payment: discredit Ripple, at the costs of her own reputation. If you look at her tweets in that light, she does deliver pretty well.

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12 minutes ago, lucky said:

She appears extremely uncurious and hateful to anyone who disagrees with her. That is not at all the right mentality to acquire knowledge and insight into complex matters. That makes me think, either she does not have knowledge, or she's really "doing her job" for which she accepted a handsome payment: discredit Ripple, at the costs of her own reputation. If you look at her tweets in that light, she does deliver pretty well.

can't really blame her though. she's dealing with the twitter xrp army. i don't think she'd be one to sell out, but who knows. she does have a deep understanding of the industry it seems. but who's right? her or ripple's board who also have extensive experience in banking or just some basic misunderstanding somewhere?

Edited by invest2lose

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13 minutes ago, invest2lose said:

can't really blame her though. she's dealing with the twitter xrp army. i don't think she'd be one to sell out, but who knows. she does have a deep understanding of the industry it seems. but who's right? her or ripple's board who also has extensive experience in banking.

I mentioned elsewhere that if there was any weight in her claims it would have had plenty of airing at any and all of the many conferences full of bankers where Ripple were on stage claiming Nostro as a pain point.  

I was briefly wondering if she had a point,  but as soon as I realised it actually CANT be correct I stopped wondering.

If it was a conference of the Formula One industry, and you had a company claiming that they can help with the big problem of having to keep spare cars at every track, (when in fact that just doesn’t happen,) then you would expect them to be put straight on their nonsense.  Since that hasn’t happened till now with this one non-player piping up,  you know she can’t be correct.

 

EDIT:   BTW I just made the F1 example up...  maybe they actually do keep cars at every track...  I wouldn’t know...  with my luck they do....   :)      But if they didn’t... and claimed it as an issue...  it would be debunked quickly.

Edited by Tinyaccount

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She may have some "deep understanding" of something.  But anyone who has an automatic tone like this- in writing an article for a financial magazine- or on twitter- so judgemental, so denigrating, so posturing themselves as 'the oracle of blockchain in banking' insulting to David Schwartz and Ripple the company as if they are crooks-  is a tad bit more of a snakeoil salesman at the very very very least.

Something isn't smelling too good over Francis' way.  Could be the breath, could be the bribery.  Smells funky.  Intellectual lack of curiosity is always a good pointer to propaganda and push messages, not idea sharing or problem solving.   

I think if she had salient points, and other questions regarding Ripple and the elements of correspondent banking she could communicate  this in a reasoned manner when writing, and on twitter, "xrp army" or not.  But that is not her forte.  She's a simpleton in that regard.   

She has become the Jerry Springer of Forbes magazine.  We should get ready for Christmas dinner to be thrown in our face because that is the emotional trash which she trades upon.  Good for her, and congratulations you dear heart Francis.

Edited by xrphilosophy

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