The entry of Ripple into the international settlement market is greatly felt by SWIFT. This is because swift just updated its system with the aim of becoming more efficient, and they tagged the upgrade “global payments innovation.” With the help of this upgrade, the transactions of the firm will now be processed within thirty minutes.
Nevertheless, the firm is taking the competition a little bit higher by saying that blockchain tech has a scalability issue, and this makes it impossible to implement at a larger scale without exposing some vital information. SWIFT also claims that the speed issue which is the major selling point of Ripple isn’t really an issue, since they already have it through their cloud platform.
Brad Garlinghouse’s Comment
Ripple recently hit back, with the CEO of Ripple – Brad Garlinghouse saying that the upgrade of SWIFT is like putting a model-T engine in a Ferrari shell, hence, it can’t effectively handle the issue of liquidity. All the claims and arguments of these firms only lead to one thing, and this shows that the competition for cross-border settlements is actually hitting up.
Who Will Win This Battle?
Ripple is in the best position to win this battle from the look of things. This is because the firm is solving a major issue that SWIFT can’t solve, and that is “liquidity.” If SWIFT can solve the issue of liquidity, there’d be no need for banks to hold back trillions of dollars in Nostro Vostro accounts.
Ripple is able to bypass this issue because there is no need for banks to hold XRP for long, but only a couple of seconds. This means that the issue of volatility in digital currencies that SWIFT refers to as an issue for Ripple is not relevant. The volatility of XRP does not have any effect on Ripple.
Putting all these factors into consideration, it is obvious that Ripple is the winner of the battle for the dominance of cross-border settlements. It is far more effective than SWIFT in solving banks international transactions issues, especially as a cost-effective mechanism.