Garlinghouse: Settlement Time, Not Just Volatility, Drives Cross-Border Risk

Ripple CEO Brad Garlinghouse has reignited the debate over cross-border payments, arguing that XRP exposes institutions to less transaction risk than traditional SWIFT transfers — even though XRP is inherently more volatile than fiat currencies. The argument was recently resurfaced by crypto researcher SMQKE on X.

The discussion regained traction after SWIFT outlined its blockchain strategy, explaining that it intends to upgrade rather than replace the global payment network currently trusted by more than 11,500 financial institutions across over 200 countries and territories. Rather than constructing an entirely new system, SWIFT is integrating shared-ledger technology into its existing infrastructure, aiming to combine tokenized settlement with the scale, resilience, and interoperability that the current banking network already provides. SWIFT has been actively testing tokenized asset settlement through pilots involving major financial institutions, signaling that its modernization effort is already underway.

In response to SWIFT's remarks, SMQKE shared a document in which Garlinghouse explained that settlement time — not price volatility alone — is the primary source of risk in cross-border payments.

XRP as a Faster, Lower-Risk Alternative

According to Garlinghouse, the average SWIFT transfer takes approximately three days, or roughly 270,000 seconds, to settle. Throughout that window, institutions remain exposed to foreign exchange fluctuations, liquidity costs, counterparty risk, and settlement uncertainty, frequently requiring costly hedging strategies. The traditional system also depends on pre-funded accounts — known as nostro and vostro accounts — in which banks must lock capital in advance across multiple correspondent institutions to ensure liquidity in destination currencies, tying up substantial dormant funds that could otherwise be deployed elsewhere.

By contrast, XRP transactions on the XRP Ledger typically settle in just three to five seconds. Garlinghouse contended that while XRP is more volatile than fiat currencies, its extremely short holding period translates into lower overall market exposure.

"If you compare 270,000 seconds in a low-volatility asset to three or four seconds in a highly volatile asset like XRP, it turns out you're taking less volatility risk with an XRP transaction than you are fiat."

He added that because XRP is held only briefly before being converted into the destination currency, institutions can largely avoid the need for expensive hedging.

"With XRP, it's happening so fast you don't really need to hedge it because you're in and out of it in a few seconds."

Two Approaches to the Future of Global Payments

The comparison underscores two distinct visions for the future of international payments. SWIFT is modernizing its established banking network with tokenized settlement capabilities, while Ripple continues to promote XRP as a blockchain-native bridge asset that enables near-instant settlement without the need for pre-funded accounts.

Notably, a recent Ripple documentation showed that its payment infrastructure can interoperate with SWIFT messaging, demonstrating that blockchain innovation and traditional banking rails are not necessarily competing systems. The future of cross-border payments could potentially combine SWIFT's global connectivity with blockchain-powered real-time settlement to deliver faster, more efficient international transactions.

Source: Coinpaper