American model Bri Teresi recently discussed the potential role of XRP in Japan's reverse yen arbitrage trading, which is worth up to $45 trillion. Teresi pointed out that XRP has fast and Programmability settlement capabilities, meeting the needs of modern financial infrastructure. She emphasized that the bank for international settlements (BIS) recommends effective settlement of assets turning over 8 to 10 times daily to ensure Liquidity, while XRP's design turnover speed far exceeds this standard. Japan's SBI Remit has started using XRP for fast cross-border settlement.
Reverse arbitrage trading refers to investors borrowing funds in low interest rate countries and investing in high-yield assets to obtain differential returns. Japan has long maintained a low interest rate, even negative interest rate environment, giving rise to a large-scale yen arbitrage trading. According to data from the Japanese Ministry of Finance, the trading scale is approximately 4.2 trillion to 4.5 trillion USD. After the Bank of Japan ended negative interest rates and raised the benchmark rate in March 2024, some arbitrage trades triggered reverse operations, with about 40% of trades closed and the remaining 60% still ongoing.
Tracy's analysis suggests that such large-scale arbitrage trading reverse operations require fast and low-cost currency exchanges, whereas traditional channels are often slow and expensive. The high efficiency and strong security of XRP's cross-border transfers give it potential application value in such transactions. Japanese institutions have long collaborated with Ripple, and SBI Remit has utilized XRP in payments between Japan and the Philippines, as well as Japan and Indonesia, providing practical cases for its role in reverse arbitrage trading.
It points out that if a large amount of funds flows through XRP, its price may be significantly affected, even attracting high market attention. However, price predictions still carry uncertainty, and investors should treat them with caution.
Overall, the adjustment of Japan's policies, the application of XRP in Japan, and the flow of reverse arbitrage funds collectively form a market landscape worth paying attention to, providing new perspectives for the potential demand and application of XRP.
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