Ripple recently posted some deeper details about RippleNet highlighting key advantages of their product. In the official article, the company spoke about Nostro accounts and appropriate issues that large financial institutions have with them. In addition, the article discussed the key ways their product of RippleNet is able to solve these issues.
The article started by explaining what actually the Nostro accounts are. It explained that “Nostro accounts are both the backbone and the bane of international banking. They are the providers of liquidity; accounts that large financial institutions hold in local market currencies on each side of a transaction to facilitate a payment”.
The highlighted issues with these accounts were further on highlighted. “Nostro accounts tie up hundreds of millions of dollars that could be used for investment, lending or other more productive purposes. They create capital inefficiencies for an institution, add costs, and increase risks from counterparty and currency exchange fluctuations”, continued the message.
The article went on explaining: “before an institution can deliver a faster, lower cost and more modern international transaction experience. They must first address their liquidity needs. RippleNet efficiently solves these liquidity pain points for financial providers and banks using flexible solutions that address various types of liquidity provisioning. Through its global payments network, RippleNet supports three types of liquidity arrangements”
In addition, the article stated that RippleNet also give the opportunity to financial institutions to even “link together multiple liquidity arraignments within the same transaction to optimize their transaction networks”.
XRP Digital Assets
The message also talked about the importance and capabilities of XRP digital assets. It also stated that using cryptocurrencies for liquidity purposes “has proven time and money savings for providers. Pilots in the crucial U.S. to Mexico remittance corridor using XRP as a digital asset demonstrated savings of 40-70% compared to traditional costs”. Meanwhile it also helped measurable reduce the actual settlement times.
“By solving global liquidity needs, RippleNet allows banks and providers to focus on the speed and cost of international transactions. Ultimately, it will help unlock the full potential of the coming Internet of Value”, concluded the article.
