XRP vs. SWIFT: Can Ripple Compete in Global Payments?
SWIFT Exec Doubts XRP's Viability for Bank Settlements
Tom Zschach, Chief Innovation Officer at SWIFT, has reignited the discussion around Ripple's XRP as a settlement rail. He questioned the likelihood of banks adopting XRP, suggesting they would prefer internal payment systems, tokenized deposits, or regulated stablecoins.
Zschach's comments came in response to a LinkedIn discussion about stablecoins and their potential as settlement rails. One user argued that Ripple's infrastructure, with XRP acting as a bridge for liquidity across currencies and stablecoins, provides a robust foundation. They suggested that stablecoins like USDC could operate on top of the XRP Ledger (XRPL), enhancing efficiency.
Zschach countered, questioning whether banks would be comfortable “outsourcing settlement finality” to XRP, which he described as “not a deposit, not regulated money, and doesn’t sit on their balance sheet.” He believes institutions will likely favor solutions they already trust, such as internal rails or regulated stablecoins.
The Case for XRP: Efficiency and Accessibility
Critics of traditional banking systems highlight the inefficiencies of global payments. Banks currently pre-fund trillions of dollars in nostro and vostro accounts to facilitate cross-border transactions. These funds remain largely idle.
XRP aims to eliminate the need for pre-funded accounts by acting as a neutral bridge asset. Analysts predict Ripple could capture 15% of SWIFT's market share within five years.
While major banks like JPMorgan and HSBC could develop proprietary settlement rails, these systems often remain isolated and still grapple with liquidity issues. XRP, existing outside a bank's balance sheet, offers a potentially scalable settlement bridge across multiple institutions.
Addressing Regulatory Concerns
Zschach emphasized the importance of “legal enforceability,” adding to the debate of liquidity versus legal assurance. Ripple has been actively engaging with regulators for over a decade, securing licenses in key jurisdictions and launching On-Demand Liquidity (ODL) corridors. The company's recent introduction of an RLUSD stablecoin reflects its commitment to regulatory compliance.
XRP Ledger: 24/7 Settlement
Unlike some tokenized deposits and stablecoins that may face restrictions outside business hours, the XRP Ledger operates continuously, 24/7, with no downtime. This always-on functionality can result in cost savings that internal bank rails cannot replicate.
As noted by XRP community member $589, “SWIFT’s current system serves as a messaging network rather than a settlement platform, continuing to rely on nostro/vostro accounts.”