Ripple is proud to work with R3 and its member banks to institutionalize XRP as a bridge asset. Image: Shutterstock
Today, we are announcing that twelve banks belonging to a consortium led by financial innovation company R3 is trialing Ripple’s native digital asset, XRP, to scale liquidity and reduce the costs and inefficiencies of cross-border payments.
#Fintech company @R3CEV trials Ripple’s XRP to scale liquidity, reduce costs of cross-border #payments. Tweet This
The R3 member banks involved in the trial include Barclays, BMO Financial Group, CIBC, Intesa Sanpaolo, Macquarie Group, National Australia Bank (NAB), Natixis, Nordea, Royal Bank of Canada (RBC), Santander, Scotiabank, and Westpac Banking Corporation.
Rather than relying on nostro accounts to hold various currencies around the world, banks can enable real-time value exchange by using an independent digital asset. This blockchain-inspired alternative to correspondent banking provides on-demand liquidity and dramatically reduces associated costs.
David Rutter, CEO of R3, commented on the trial with Ripple:
“The tradition of holding numerous currencies across multiple accounts in different countries is costly and inefficient. This is a legacy issue from a time when the technology did not exist to offer a viable alternative; however, digital assets and distributed ledgers can now enable real-time exchange of currencies between parties anywhere in the world without the need for a third-party intermediary. This prototype paves the way for a major overhaul of how banks process and settle cross border payments.”
Independent digital assets enable global reach without the liabilities of those issued by banks themselves. Of the world’s most popular digital assets, XRP boasts the fastest settlement speed, settling in about five seconds or less. The trial demonstrates that Ripple can enable banks to make markets for fiat currencies using XRP and then complete authenticated payments without multiple nostro accounts.
In addition to benefitting from liquidity efficiencies and nostro consolidation, banks can save up to 60 percent in payment processing costs with Ripple’s solution and XRP. This cost-savings frees up capital to generate revenue opportunities, including new product offerings for high-volume, low-value payments and access to new corridors.
Executives of R3’s member banks commented on the benefits of utilizing independent digital assets like XRP for cross-border payments:
“This technology will be a catalyst in reducing complexity, streamlining processes and ultimately lowering the significant costs associated with interbank cross-border payments, which will benefit both banks and their customers in the years ahead.”
— Andrew Irvine, Head of Canadian Commercial Banking and Partnerships, BMO Bank of Montreal
“A more efficient global payment system is all about making payments faster, easier and more transparent for businesses and consumers. Using innovative technology to rethink traditional processes is exactly what’s needed to give businesses everywhere an easier way to send and receive payments, and we are very active in making that a reality for our clients.”
— Phil Griffiths, Senior Vice-President, Global Transaction Banking, CIBC
“We were really glad both to take part in the test team and about exploring the Ripple solution and its technical implications in depth. We found the exercise very interesting and we deem that the next challenge is to understand its full potential impact, especially in regulatory terms. The contribution of Central Banks and Regulators to supervise cryptocurrencies together with a higher focus on relevant clearing and settlement is the way to give confidence to the market, reducing the liquidity absorption for the banks and reducing systemic risks.”
— Stefano Favale, Head of Global Transaction Banking, Intesa Sanpaolo
“By developing blockchain with native digital assets specifically dedicated to cross-border transactions, Ripple has a great potential to revolutionize traditional global payment concepts — enabling international payments in real time, at lower costs, digitally/cryptographically secure — significantly contributing towards digitalization of the financial industry and our world!”
— Roman Dahl, Senior Business Developer, Transaction Banking, Nordea Bank
“Trial projects like this and the knowledge we gain from them are helping us build a path for the future of payments and deepen the industry’s knowledge on the potential blockchain may have for better payments management worldwide.”
— Carolyn Burke, Head, Regulatory Payments, RBC
“Combining the use of digital currency on a shared ledger with our previous low-value, cross-border payment proofs of concept holds great promise for transformation across the entire international payments value chain as well as for financial inclusion.”
— Mike Baldwin, Head of Transactional Solutions, GTS, Westpac Institutional Bank
We’re excited to work with R3 and its member banks to institutionalize the use of XRP, make cross-border payments truly efficient for banks and further our vision of enabling the Internet of Value by taking this trial into commercial production.
Contact us to learn how Ripple can lower your institution’s liquidity costs and enable new types of corporate and consumer payments.