Key FedNow Contributor: Precise Method In Which Banks Can Use XRP for Payments

A video featuring Jess Cheng, former legal counsel at Ripple and a key contributor to the Federal Reserve’s FedNow payment system, is circulating online.

Crypto researcher SMQKE (@SMQKEDQG) posted the clip, which contains a detailed, technical explanation of exactly how banks can use XRP to settle cross-border payments.

The Problem XRP Solves

Cross-border payments between banks in different countries require a link. Traditionally, that link is a shared account holder, an intermediary with accounts at both banks. Cheng explains that this works when a common account holder “has an account with Alphabank and with Betabank.”

The problem is that this arrangement breaks down in emerging markets. Finding a shared account holder with accounts in, say, Brazil and Thailand is not practical. This is where XRP enters the picture.

How the Mechanism Works

Cheng walks through a concrete example. Alphacorp in Brazil wants to pay Betacorp in Thailand. Brazilian Real will need to leave Alphacorp’s account at Alphabank, and Thai Baht must move into Betacorp’s account at Betabank. The question is how Alphabank and Betabank settle the transaction between themselves.

Her answer is straightforward. If Alphabank holds XRP, and Betabank agrees to receive XRP, the two banks can settle commercially. As Cheng puts it, Betabank receives the full payment from Alphabank upon the transfer of a specified amount of XRP. The XRP balances are recorded on the Ripple Consensus Ledger, a distributed ledger that both banks can reference.

The two banks also implicitly agree on an exchange rate through this process. Betabank determines how much XRP it will accept in exchange for covering the Thai Baht payment to Betacorp. That agreed amount defines the rate.

Why Emerging Markets are Crucial

Cheng is specific about the use case. She identifies banks “supporting emerging markets” as the primary beneficiaries of this structure. Currency corridors between markets like Brazil and Thailand lack the infrastructure that major currency pairs have. Correspondent banking relationships are thin. XRP functions as a bridge where fiat-to-fiat pathways are difficult to establish.

SMQKE’s post highlights this point. Cheng describes a working commercial framework. One where two banks agree bilaterally to use XRP, record balances on a distributed ledger, and settle without a third-party intermediary.

What This Confirms for XRP

The video confirms that XRP’s role in cross-border payments is not limited to retail or institutional speculation. Banks can deploy it at the settlement layer between themselves to move value across currency corridors that lack traditional infrastructure. The mechanism requires no common correspondent. It requires only that both banks hold or agree to accept XRP.

Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are advised to conduct thorough research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.

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