Do banks need Ripple XRP to facilitate money transfers?
Ripple Labs entered the financial markets by solving a key problem that has plagued the global banking sector for decades. It offered its clients a product to facilitate seamless money transfers using blockchain technology. Leading financial institutions such as Bank of America and JP Morgan use Ripple's services to secure their transactions. Despite partnerships with major banks and fintech companies, the price of Ripple's XRP has barely increased.
Even after banks expanded their partnerships with Ripple Labs, financial institutions no longer need to manage XRP tokens. Ripple offers two different products: RippleNet and On-Demand Liquidity (ODL), which are basically independent of each other.
By using ODL to facilitate money transfers, XRP plays a crucial role, as it is used as gas for settlements and fees. It is mainly used by developers and creators of dApps who need XRP for their daily operations.
However, global banks use RippleNet, which facilitates money transfers without the need to hold XRP. ODL is used when there are liquidity issues, but global banks do not have that problem. Funds are abundant, and there is demand for faster and uninterrupted transactions.
Therefore, there is no correlation between banks using Ripple's services and the price of XRP on the charts. Both are different and do not contribute at all to the token's price. Banks do not risk holding XRP to facilitate transactions, as this contradicts the purpose of money transfers. They do not need another intermediary ($XRP ), as they are, in fact, the intermediary between both parties.
