Could Blockchain Technology Prevent the Next Financial Crisis?
Cointelegraph By Stephen King's original article for cointelegraph.com reduced by 40%
We have started to see repo rates spike upward, pointing to an indication of supply issues from banks issuing short-term cash to other banks and an increasing demand from banks and corporations that need short-term cash. Although we couldn't see which banks were the culprits, several banks showed their cards as the interbank lending rates rose well above the Fed's set interest rates. RippleNet is a payments network based on blockchain technology, with over 200 banks and payment providers worldwide and consisting of three main products: xCurrent, On-Demand Liquidity, and xVia; each serving a specific role.
Before the 2007 crisis, regulators could trust that banks had enough liquidity to remain solvent; however, following the financial crisis and failure of several banks like Lehman, that ceased to be the case. The new regulations mandated banks to hold pre-funded accounts, or existing pools of liquidity, to move paper currencies between banks in disparate countries. Bank X in the U.S.
and Bank Y in Mexico must now hold a percentage of their deposits in either U.S. dollars or Mexican pesos in order to move currencies between one another. xCurrent puts a temporary blockchain between Bank X and Bank Y.
When Bank Y wants to receive U.S. dollars from Bank X, rather than Bank X having to hold those dollars on reserve at Bank Y to ensure proper liquidity, they can sell dollars for XRP. The XRP can be sent to Bank Y, who can then sell it in exchange for U.S.
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CN [too long; didn’t read]
Summarised crypto news.