The Chief Innovation Officer at Swift, Tom Zschach, has raised doubts about whether Ripple’s technology and the XRP token can meet the standards of global banks for cross-border settlements. This has sparked a new debate within the XRP community, which has long seen Ripple as a challenger to Swift’s dominance in the financial industry.
Zschach’s remarks, published on LinkedIn, questioned whether banks would be comfortable outsourcing settlement to an external token like XRP. He noted that while some observers see XRP as a natural bridge for payments, the more difficult question is whether banks will ever be comfortable using a token that is not a deposit, not regulated, and does not sit on their balance sheet.
Concerns about XRP and Ripple
Zschach’s concerns about XRP and Ripple are centered around the issue of legal enforceability and the fact that liquidity is not the same as regulatory compliance. He argued that when banks achieve scale, they may see little reason to pay an external asset like XRP a “toll” if they can settle in instruments that they already issue and trust.
According to Zschach, the use of external tokens like XRP may not be the most efficient or cost-effective solution for banks, especially when they can use their own instruments to settle transactions. This has led to questions about the scalability and adoption of Ripple’s technology in the global banking industry.
Role of Blockchains in Finance
In a separate post, Zschach discussed the broader role of blockchains in finance, arguing that the debate about decentralization often distracts from the actual question of whether a system with institutional risk management is in place. He noted that neutrality in finance is not about the number of nodes, but about whether the network privileges one participant over another.
Zschach compared open blockchains to a “fast engine without a cockpit,” arguing that they remain incomplete for institutional use without legal framework conditions, data protection, security, and regulatory oversight. He emphasized the need for governance, regulation, and enforceability in blockchain systems, noting that code and validators alone cannot replace billions of dollars in value.
For Zschach, the lack of trust in blockchain systems explains why banks are still dependent on Swift, which does not issue its own assets, compete with its members, or favor one institution over another. While blockchains like Ethereum are part of the solution, Zschach argues that neutrality in markets requires governance, regulation, and enforceability.
Conclusion
In conclusion, Zschach’s comments have raised important questions about the readiness of Ripple and XRP to meet global banking standards. While Ripple’s technology has shown promise, the concerns about legal enforceability, regulatory compliance, and scalability remain significant hurdles to adoption. As the financial industry continues to evolve, it is likely that we will see further debate and discussion about the role of blockchain systems and external tokens like XRP in cross-border settlements.
Source: https://cryptoslate.com/swift-cio-questions-ripple-and-xrps-readiness-for-global-banking-standards/
