- The International Monetary Fund (IMF) has issued several statements previously regarding the potential role of digital currencies in the future economy.
- The IMF may explore Ripple's suite of financial products.
xRapid's Role in Cross-Border Payments
Bitcoin may be the most famous cryptocurrency but Ripple will certainly have a much greater impact on the financial world. This is because the rapid transaction possibilities are easier to integrate with existing systems.
As such, this is probably the first cryptocurrency that will have significant effect on the global population.
The existing structure of global money transfer is favorable to banks and other large institutions. This makes it necessary to have more efficient payment solutions for money transmitters across the world. Moreover, the transaction fees for most banks are significant.
XRapid is a Ripple solution that enables financial institutions to minimize liquidity costs and improve customer experience. The aforementioned challenges certainly ail small banks and payment providers in accessing the global payments systems.
The Importance of The Liquidity Solution
On-demand liquidity is important because it gives smaller institutions capital and the ability to scale up transactions. As such, xRapid will make small business payments and market payouts more efficient globally. Kevin Mole, vice president product marketing, in an interview for Ripple-Drop 13 explained on-demand liquidity as follows:
‘On-demand liquidity is a way for customers to send fast low-cost payments without having to prefund a destination account. On-demand liquidity puts XRP in the middle of payments between countries to allow sending cross border payments instantaneously’
The global money-sending industry is worth about 10-15 trillion annually. This market is colossal and smaller banks and such payment providers can fall between the cracks. Accordingly, these entities need fast, scalable and cost efficient solutions to have a market presence.
XRP is precisely what they need. The remittance industry, in particular, could use such a solution. This is because the workers who send these payments often need as much of it as possible to reach their families. It is a large market with remittances from the USA to Mexico and the Philippines worth $31 billion and $33 Billion dollars respectively.
Furthermore, xRapid will vastly improve the efficiency and reach of this market. It goes without saying that this is an opportunity for Ripple itself to grow exponentially.
Ripple could really be the first cryptocurrency to gain widespread institutional adoption. The IMF and the World Bank are two giants in global finance. Even the mention of their interest in xRapid should be enough to raise excitement.
A recent World Bank report praised the transformative impact of XRP in improving the efficiency of global payments. Besides, the solution can improve access to finance for many in developing countries which is in line with IMF goals.
the Bretton Woods 75 was a very interesting event. A lot of attention was put on the fact that the USD holds too much power. A two hour discussion in how the USD as a world currency was not good. Representatives from EU (Euro) and China (Remnibi)
— XRP NEO (Not Giving Away Crypto) (@XRP_Anderson) June 9, 2019
The IMF, as part of the Bretton Woods 75 summit also took note of this alternative payment channel. The actual conversation was actually largely about other currencies could attain parity to the US dollar.
That said, the conversation on financial inclusion was an important topic as well. This is because of all people, a young girl from Mexico. She talked of violence and the need for financial inclusion for those in developing countries.
Bilateral trust lines between Central banks are inefficient and not transparent. If the IMF goes ahead with exploration of other options, this could be historic for XRapid and RippleNet. These two have the potential to be front and center in a new digital financial system. Ripple is certainly ready for this future.