Reserve Requirement Clarification

[jd2424]

Let's assume the below scenarios all use Ripple to facilitate the transaction behind the scenes (meaning, the entities are not transacting directly in XRP). Which scenarios require a 20 XRP reserve requirement and from who? Which instance are correct/incorrect? Thanks in advance. 

Scenario 1 -- If I wire USD from a JP Morgan Bank account to a brokerage account (Interactive Brokers, Fidelity, etc.):  JP Morgan and the broker each have a 20 XRP reserve requirement, as opposed to my bank account being required to have the 20 XRP requirement 

Scenario 2 --  Acme Inc, a multinational conglomerate, wants to hedge their South African Rand exposure: The bank and the bank's counterparty that they use to execute the currency hedging has the 20 XRP reserve, not Acme's bank account 

Scenario 3 -- Peer to Peer transfer of funds across a border (Zhang sends money to his parents in China): The entities executing the transaction each need to have 20 XRP, as opposed to Zhang and his parents each having 20 XRP in their respective accounts)

Scenario 4 -- A potential future example... I make an iTunes purchase using a credit card, but we use Ripple as the medium instead of Mastercard/Visa:  The bank associated with the credit card and Apple each have a 20 XRP requirement

Scenario 5 -- Com Ed (Energy Bill) charges my checking account monthly: ComEd and my bank each have the 20 XRP requirement (meaning, my checking account does not have the 20 XRP requirement)

Scenario 6 -- I make a friendly wager with my friend that the Washington Generals will beat the Harlem Globetrotters. I lose. Therefore, I directly send him $20 via iMessage: Apple has the 20 XRP reserve (not me nor my friend). 

Thanks for the help!

 

 

 

[nikb]

The simple answer is this: anytime a Ripple wallet needs to be created, it must be funded with, at least, the reserve amount (currently 20 XRP).

It's unclear to me in which of the above scenarios this is necessary, so I can't answer.

[Chan_Maddanna]

53 minutes ago, jd2424 said:

Let's assume the below scenarios all use Ripple to facilitate the transaction behind the scenes (meaning, the entities are not transacting directly in XRP). Which scenarios require a 20 XRP reserve requirement and from who? Which instance are correct/incorrect? Thanks in advance. 

Scenario 1 -- If I wire USD from a JP Morgan Bank account to a brokerage account (Interactive Brokers, Fidelity, etc.):  JP Morgan and the broker each have a 20 XRP reserve requirement, as opposed to my bank account being required to have the 20 XRP requirement 

Scenario 2 --  Acme Inc, a multinational conglomerate, wants to hedge their South African Rand exposure: The bank and the bank's counterparty that they use to execute the currency hedging has the 20 XRP reserve, not Acme's bank account 

Scenario 3 -- Peer to Peer transfer of funds across a border (Zhang sends money to his parents in China): The entities executing the transaction each need to have 20 XRP, as opposed to Zhang and his parents each having 20 XRP in their respective accounts)

Scenario 4 -- A potential future example... I make an iTunes purchase using a credit card, but we use Ripple as the medium instead of Mastercard/Visa:  The bank associated with the credit card and Apple each have a 20 XRP requirement

Scenario 5 -- Com Ed (Energy Bill) charges my checking account monthly: ComEd and my bank each have the 20 XRP requirement (meaning, my checking account does not have the 20 XRP requirement)

Scenario 6 -- I make a friendly wager with my friend that the Washington Generals will beat the Harlem Globetrotters. I lose. Therefore, I directly send him $20 via iMessage: Apple has the 20 XRP reserve (not me nor my friend). 

Thanks for the help!

Expanding on @nikb fundamental answer (technical).. and trying to add some clarity to your use-cases, my response follows :

Scenario 1 - Onus of XRP reserve is on the Bank's settlement wallet(true sender) and Brokerage Houses  settlement wallet (true receiver) - You will only see -USD in your bank account and +USD in your trading account. So Answer : both institution account needs XRP & your account won't need any XRP reserve  (Assumes a system where XRP underpins transactions - a valid & sound XRP use-case )

Scenario 2 --  Same as Scenario 1, here again settlement happens between two institutional account ( aka: their XRP wallet with reserve ) - Acme Inc, a customer. So Answer : Acme Inc's account will indeed Need XRP if it is to HOLD XRP in its account as hedge. If it does, then it will need 20 XRP reserve + its other balances + the Hedge amount of XRP.  

Scenario 3 - assuming Zhang and his parents both are using institutions for money transfer- this is NOT peer to peer. Peer to Peer requires doing ti by themselves and not depending on an institutional service such a a Bank's checking/savings account. So in this case again the actual settlement is between two banks from Zhang's local bank to His Parent's country local banks. Assuming both banks are using XRP for settlement ( a perfectly viable use case ) -  So Answer :Both bank settlement accounts need XRP, but not Zhang and His parents ( if their accounts are denominated in fiat )

Scenario 4 --  again settlement is between designated Apple's wallet and banks card services wallet. The iTunes user has nothing to do with XRP in this case if he is using credit card ( of any asset - even XRP credit card  ) So Answer : A user using credit card denominated in XRP/USD etc has nothing to do with actual settlement between their respective service providers and their back-end institution. So In this case the User will NEVER need a reserve.

Scenario 5 -- If your assumed checking account is an 'XRP' account, represented by a wallet on RCL - then regardless of who is doing settlement, you will need reserve to have your wallet working.  So Answer : your account will need 20 XRP minimum reserve if its XRP account/wallet - Regardless of your transactions.

Scenario 6 --  again in this case you are using iMessage service , and the asset you are worried about is Dollar.. apple uses XRP for settlement - again the onus is on them. Answer : Apple and your friends receiving account both will need XRP.

general Scenario : any peer-to-peer transaction will need reserve XRP + the other amount needed for the represented value.

in short, all final settlement on the layer using XRP as native settlement asset 'will' need XRP. 

 

Edited May 29, 2017 by R8102V1D2D

[jd2424]

@R8102V1D2D Thanks for taking the time to type all that up, much appreciated!