The number of banks recognizing the potential of Ripple’s software solutions is growing weekly, steadily expanding Ripple’s partner network. Euro Exim Bank plans to combine these payment solutions to launch a new type of financial service.
Euro Exim Bank intends to deploy the cross-border software applications xCurrent and xRapid to power and optimize a new trade finance system. The bank plans to start the pilot immediately, as Graham Bright, head of compliance at Euro Exim Bank, expects significant benefits. He told Global Trade Review that the traditional use of xCurrent will be expanded (translated):
While Ripple has so far focused xCurrent primarily on payment messaging, the two parties are now preparing to test a feature that embeds trade finance instructions within an xCurrent message.
This is comparable to what Swift provides today, but operates in a blockchain-based network that enables real-time exchange without intermediaries.
Technically, beyond simply transmitting a payment instruction, the idea is to deliver a trade instruction to the counterparty. This could be a letter of credit or a performance bond. Such a trade instruction can be fully represented within a message transmitted via xCurrent. Euro Exim Bank aims to initiate the rollout in the first quarter of 2019.
Bright also explained that xRapid addresses a major challenge that Swift and traditional finance have struggled to solve. When executing cross-border payments, banks must ensure liquidity in the destination currency. Swift and xCurrent are both messaging services that send payment orders. The actual funds transfer typically occurs through a deposit in a nostro account at a local correspondent bank (translated):
We operate in a number of countries around the world. Due to risk management in some banking markets, customers can have difficulty economically sourcing currencies needed to pay for their goods and services internationally.
Euro Exim Bank was founded in 2011 with offices in London and St. Lucia and provides financial services for importers and exporters worldwide.
Image credit: Royalty-free stock illustration number: 782968729 | By Immersion Imagery