New Document: This XRP Utility Matches What FedNow Requires

Ripple’s On-Demand Liquidity (ODL) and the Federal Reserve’s FedNow Service both address liquidity requirements for payment activity that operates around the clock. Crypto researcher SMQKE has used documentation from Ripple and the Federal Reserve to compare the two systems, focusing on 24/7 liquidity management.

In a post, SMQKE wrote, “Yes, Ripple’s ODL uses XRP to deliver 24/7 liquidity management which matches exactly what FedNow requires of private sector instant payment services.” The researcher attached screenshots of documentation from both Ripple and the Federal Reserve to support the comparison.

Ripple’s documentation describes ODL as a liquidity management solution for RippleNet customers. The system allows customers to move funds across borders and currencies without pre-funding accounts in different markets. Ripple also says ODL reduces operational costs and frees working capital while supporting continuous cross-border settlement.

The documentation specifically identifies XRP as ODL’s bridge currency. According to the material, ODL sources liquidity on demand and uses XRP to facilitate real-time movement of funds.

FedNow Sets Out Its Liquidity Management Function

The second image from SMQKE’s post comes from Federal Reserve documentation for the FedNow Service. The document discusses Liquidity Management Capabilities, or LMT, which support liquidity management for 24/7 instant payments.

The Federal Reserve document says FedNow enables fund transfers between master accounts, between a master account and a joint account, for private-sector instant payment services.

The document also explains that FedNow participants can authorize service providers to initiate liquidity transfers on their behalf. Correspondent institutions can also settle liquidity management transfers that participating FedNow institutions initiate.

Federal Reserve Banks will implement controls to ensure that participants use these liquidity management transfers only for instant payment liquidity needs.

SMQKE’s comparison centers on the fact that both documents discuss liquidity management in connection with payment systems that operate continuously. The researcher uses the documentation to link Ripple’s description of ODL to FedNow’s stated requirement for liquidity management in private-sector instant payment services.