Let's see if I understood correctly, this is how the approval of $RLUSD to XRP affects if I'm wrong, correct me.
Of course! Let's explain it with a practical example between the National Bank of Japan (BOJ) and the European Central Bank (ECB) using the Ripple system with RLUSD and XRP.
Scenario: International transaction
The BOJ wants to send 100 million euros to the ECB. This involves converting yen (JPY) into euros (EUR) quickly and efficiently.
Traditional process
1. Intermediaries: The BOJ must go through multiple correspondent banks to convert JPY to EUR, which takes days and generates high costs (fees and exchange rates).
2. Problems:
High delay (days or weeks).
High costs for intermediaries.
Risk of fluctuations in the exchange rate.
Process with Ripple, XRP and RLUSD
1. Initiation of the transaction:
The BOJ initiates a transfer through RippleNet.
Use RLUSD as a liquidity system (a Ripple-backed solution that ensures access to various assets, including fiat currencies and cryptocurrencies).
2. Conversion with XRP:
RippleNet instantly converts the 100 million yen (JPY) into XRP.
XRP acts as a "bridge currency" to transfer the value from the BOJ to the ECB.
3. Instant transfer:
XRP travels from the BOJ to the ECB in seconds, thanks to the Ripple network.
This eliminates the need for intermediaries.
4. Conversion to Euros:
At the ECB, XRP is automatically converted into 100 million euros (EUR).
RLUSD can guarantee the liquidity needed for the ECB to receive the exact amount in euros.
Advantages of the Ripple system with XRP and RLUSD:
1. Speed: The transaction is completed in seconds or minutes.
2. Low costs: There are no intermediaries, and Ripple fees are negligible.
3. Guaranteed Liquidity (RLUSD): RLUSD ensures that funds are always available for these transactions without relying on the local market.
4. Stability: RLUSD can act as an additional bridge to stabilize the flow of values ​​in less volatile assets.