Recent comments from leading strategic analyst Cedric Beau touch upon an important question: do banks need to hold XRP to use Ripple's On-Demand Liquidity (ODL).
ODL Model and Bank Balance Sheets
Proponents of ODL, including the account $589, argue that misconceptions about balance sheets fuel unnecessary fear, uncertainty, and doubt (FUD). In practice, ODL is designed so that banks and payment providers never have to warehouse XRP as a long-term asset. Instead, a bank funds fiat on one end of a transaction, market makers supply XRP liquidity, and the token is bought, transferred across the XRP Ledger in three to five seconds, and sold into destination fiat. All of this happens automatically through APIs, meaning no balance-sheet exposure for the bank.
Cedric Beau's Counterarguments
However, Beau argues that dismissing banks' reluctance to hold XRP misses the bigger picture. In his words, "Banks don’t want to hold $XRP, but they’ll use it anyway. That, precisely, is a red flag, not a feature." He insists that real adoption requires "balance-sheet-level buy-in, real corridors, and global compliance alignment." From Beau’s perspective, relying on a model where financial institutions deliberately avoid direct exposure to the underlying asset raises questions of trust.
Trust and Regulation as Key Issues
At the heart of the debate is whether ODL can achieve mainstream traction without banks directly holding XRP. Regulatory frameworks, accounting standards, and custodial infrastructure still present hurdles for large financial institutions. Until those are resolved, Beau argues, stablecoins or other digital assets may be favored because they fit more neatly into existing compliance models.
Cedric Beau's remarks underline a central tension for Ripple: ODL’s technical design reduces balance-sheet friction, but true global adoption demands institutional trust and regulatory clarity.
