XRP, payment function re-examined amid US-Iran conflict... a secret weapon to avoid SWIFT sanctions?

▲ US, Iran, XRP/AI generated image

As the conflict between the United States and Iran intensifies, a 2021 study on XRP cross-border payments is drawing renewed attention.

According to Coingape on September 11 (local time), a study linked to an Iranian academic institution analyzed the volatility and risks of international remittances using XRP. However, the study is based on 2021 data and does not address the current conflict between the US and Iran. It also did not include any content about the Iranian government using XRP for payments. The researchers focused on an international payment structure that is fast, inexpensive, and responsive to changing situations.

The study applied Monte Carlo simulations using 10,000 paths to quantitatively verify XRP-based international remittances. It also used Hidden Markov Models (HMM) and Heston stochastic volatility models. Potential downside risks were analyzed with 95% VaR and CVaR. The structure measured XRP's price fluctuation risk by assuming various market environments, not just a single payment path.

The analysis included three currency paths assumed in Ripple's payment network, RippleNet: USD and Mexican Peso, Euro and Nigerian Naira, and Japanese Yen and Korean Won. The researchers also applied a 3σ jump detection method to capture sudden changes in XRP prices that occur in extreme market conditions. Subsequently, they analyzed methods for adjusting payment paths in response to changing market conditions.

The core issue is the market shock that can occur when a volatile digital asset like XRP is used for international payments. Cross-border payments must be processed within a set time, but XRP prices can fluctuate sharply during the payment process. The study focused on measuring volatility and risk, and on methods for changing payment paths as circumstances dictate. It explains that as geopolitical tensions rise, issues of sanctions, international remittances, and reliance on existing financial networks are re-emerging, bringing past research back into the spotlight.

Coingape drew a line, stating that this study should not be interpreted as Iran's XRP adoption policy. The researchers also did not propose an XRP payment system to the Iranian government. The outlet reported that Iran is using Bitcoin (BTC) and Tether for trade amid sanctions. The focus of this study is not on the adoption of XRP by a specific country, but on analyzing how XRP-based international payments would function in a situation of increased market volatility.

[Article Key Summary]

-A 2021 study linked to an Iranian academic institution analyzed the volatility and risk management structure of XRP-based international remittances.

-The study examined three international payment paths using Monte Carlo simulations with 10,000 paths, HMM, and the Heston model.

-This study is not directly related to the Iranian government's adoption of XRP or the current conflict between the US and Iran.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*