Foreign currency exchange is a nightmare because it has multiple co-dependencies and parties with separated ledgers to keep all the transactions in place. The system relies on regulatory agencies, monopolies such as SEPA and SWIFT, brokers, traders and banks all over the world to perform a simple transaction.
With blockchain technology, it is possible to eliminate all the bad related to these - complexity, security and high cost, and emulate and exponentiate all the good: instant international currency conversion that is secure and affordable.
This is possible because by being open, records are held in public: the KYC, transaction and contracts are publicly available data. It means that regardless of the currency type, money is ultimately being held in all currencies and in multiple accounts by default. With nothing to convert, there is no money being lost.
It will take a while to reach this stage as it is more likely that - thanks to existing banking infrastructure and regulation - companies will find it is financially safer to utilize available technology to fill the gap most are worried when it comes to bitcoin, identity checking, and Anti-money Laundering (AML) and Know Your Customer (KYC) processes.
This is the first step then: to take advantage of the blockchain’s potential world changing features which are speed and security, we need to add a traditional layer of security that takes care of the human need which is more transparency: Banks needs to know who is doing what in order to meet regulation.