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What's the point of MGI and WU post CBDC?


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What's the point of Western Union or Moneygram in a world where we have CBDC's? If I need to send my money to someone using a different currency than me couldn't I just use my "banking app" whatever that'll be in the future, send my USD CBDC to their bank which will convert my USDC to their currency?

I know this is how it would work assuming XRP or something like it works as a bridge. But at this point WU and MGI are pointless yea?

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1 hour ago, stickynoodle69 said:

If I need to send my money to someone using a different currency than me couldn't I just use my "banking app" whatever that'll be in the future, send my USD CBDC to their bank which will convert my USDC to their currency?

Why would you use a stablecoin if you can settle fiat directly with XRP? That is the whole thing. You have USD, swap it for XPR, swap it for CNY. No need of any CBDC to interfere here, so the market for the WU's and MGI's still exists to make the settlements from FIAT to XRP. 

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16 minutes ago, ErikNL said:

Why would you use a stablecoin if you can settle fiat directly with XRP? That is the whole thing. You have USD, swap it for XPR, swap it for CNY. No need of any CBDC to interfere here, so the market for the WU's and MGI's still exists to make the settlements from FIAT to XRP. 

You do realize a CBDC isn't a stable coin right? Also this isn't even the topic, the question is what is the purpose of MGI and WU if CBDC's are a thing. Why would anyone need them if all these banks become connected?

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Well it depends if you're talking about national or international operations.

It's likely the IMF would control CBDCs through SDR reserves.  The CBDCs could be traded between countries through the IMF, and PSPs would not be included in this network. These PSPs would still have to use CBDCs as part of business operations, and other bridge assets/currencies networks could be used.  Of course this is just an opinion and many years down the road.

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Like legendary said, if you're talking about internal payments, then you are correct. You don't need anything other than something of your own.
I might oversimplify, but you just digitize your assets and voila.

If you're talking internationally, however, then you need something universal, accepted by all (both sides), that will act as a bridge. 

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4 hours ago, stickynoodle69 said:

You do realize a CBDC isn't a stable coin right? Also this isn't even the topic, the question is what is the purpose of MGI and WU if CBDC's are a thing. Why would anyone need them if all these banks become connected?

A third of the world's population is not connected to a bank.

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It is unlikely that CBDC's will want to do KYC/AML themselves. And other reasons like that, i.e. reason being it is not the primary job of a Central Bank. We will likely have institutions that the end-user will have to go through to make use of the CBDC. These institutions could be like the current banks or maybe directly payment service providers.

I wonder if with CBDC's the amount of nostro/vostro accounts needed would become less, as there would be one CDBC ledger for all banks in a country?

 

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18 hours ago, jn_r said:

It is unlikely that CBDC's will want to do KYC/AML themselves. And other reasons like that, i.e. reason being it is not the primary job of a Central Bank. We will likely have institutions that the end-user will have to go through to make use of the CBDC. These institutions could be like the current banks or maybe directly payment service providers.

I wonder if with CBDC's the amount of nostro/vostro accounts needed would become less, as there would be one CDBC ledger for all banks in a country?

 

- Narrow Banks, are banks that do not practice the fractional reserve business model. So PSP, Exchanges, stanble coins.

- N/V balances & market efficency/speed/time. Yes the amount of funding that N/V accts would be reduced because the number of inventory turn over cycles is vastly improved by settlement times of a few seconds.

Meaning that the same $100 can provide liquidity thousands of times per day, instead of needing hundreds of thousands of float per day.

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46 minutes ago, KarmaCoverage said:

- Narrow Banks, are banks that do not practice the fractional reserve business model. So PSP, Exchanges, stanble coins.

- N/V balances & market efficency/speed/time. Yes the amount of funding that N/V accts would be reduced because the number of inventory turn over cycles is vastly improved by settlement times of a few seconds.

Meaning that the same $100 can provide liquidity thousands of times per day, instead of needing hundreds of thousands of float per day.

Ah yes. So maybe not the amount of N/V accounts itself, that would stay the same, but the amount in the N/V accounts would be less

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43 minutes ago, jn_r said:

Ah yes. So maybe not the amount of N/V accounts itself, that would stay the same, but the amount in the N/V accounts would be less

This seems to make sense to me. Because the N/V accts could also be collateralized by an interbank loan/LoC.. which would create more systemic leverage.. because it would be reducing the amount of currency required to service the flows through that N/V relationship. 

XRP would reduce that leverage-ability arguably bringing a balancing effect to the amount of leverage existing in market.

---

RippleNet manages N/V accts between banks. That dosent need to touch XRPL. But over time I'd expect the cost of using XRP & XRPL  to fall below the cost of managing a N/V relationship. Then the pendulum swings.

Edited by KarmaCoverage
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