Ripple CEO Explores How XRP Could Overtake SWIFT

• Ripple CEO Brad Garlinghouse highlighted the potential of XRP Ledger (XRPL) to revolutionize the global banking and payments system by offering a faster, more efficient, and cost-effective alternative to SWIFT.
• Garlinghouse emphasized that Ripple’s decentralized technology could significantly reduce SWIFT’s current 6% error rate in cross-border payments.

During a recent interview, Ripple CEO Brad Garlinghouse talked about the potential of the XRP Ledger to revolutionize the global banking and payments system currently dominated by America’s SWIFT. He believes that XRP can emerge as a formidable alternative to the traditional systems.

Garlinghouse stated that with the XRPL, Ripple provides liquidity and other messaging solutions. Its robust and new architecture can replace SWIFT’s older architecture and the liquidity provided by other global banks, such as Citi.

The Ripple CEO stated that XRPL’s core innovation lies in combining liquidity with messaging in a single solution. On the other hand, SWIFT has limitations, being a messaging-only protocol that connects financial institutions worldwide. Ever since its inception five decades back, SWIFT architecture has seen limited changes, noted Garlinghouse.

#XRP will totally take over Swift! 🌐

I believe all Swift transactions will soon be processed via the XRPL! 💵💱💴

Credit: @CKJCryptonews pic.twitter.com/BcdJeW401I

— 𝓐𝓶𝓮𝓵𝓲𝓮 (@_Crypto_Barbie) August 16, 2024

Thus, SWIFT has eventually become slow and prone to errors in this fast-paced digital world. Ripple’s technology aims to overcome these limitations using modern innovations to enable quicker, more efficient, and affordable cross-border payments.

Ripple leverages decentralized technology to facilitate real-time settlement, reducing the time for cross-border payments from days to mere seconds at a fraction of the cost. The BRICS nation bloc is already looking for a SWIFT alternative, and thus, Ripple’s XRPL can find a sweet spot here, reported CNF.

Ripple’s XRPL vs SWIFT

Garlinghouse stressed the slow processing times and error rates associated with SWIFT. Currently, the SWIFT protocol has an error rate of 6%, which occurs due to mismatched information such as account details. This can delay the transactions, with a greater probability of getting them reversed.

The fact is that SWIFT is a one-way messaging platform. Thus, any mistakes and inaccuracies require a manual correction process, thereby adding to the delays. Garlinghouse said that Ripple’s decentralized technology can significantly reduce this error rate while offering real-time feedback on entering transaction details. The Ripple CEO believes that this real-time feedback can actually reduce the errors to a negligible rate of 0.1%, reported CNF.

“We see instead of a 6% error rate as reported for SWIFT, you see, you know, 10 bips of error,” Garlinghouse noted.

Against SWIFT’s messaging inefficiencies, ripple’s solution introduces a liquidity mechanism that several traditional financial institutions, like Citi, rely on banks to provide. By incorporating liquidity into transactions via XRP, Ripple enables financial institutions to unlock capital that would typically be tied up in pre-funded accounts across various markets. This innovative approach has the potential to disrupt the global banking system significantly. A market analyst believes that even if XRP contributes to 10% of SWIFT payments, it can surge to $10, per the CNF report.

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