That looks like a very interesting idea but I think any potential arbitrageur would still need to open a bank account in the 'foreign' country to move, for example, the pounds from Intersango to CurrencyFair.
I see, yes -- that's where the problem is. You can only transfer to Currency Fair from your own bank account, apparently. You can transfer out of Currency Fair (e.g., in USDs after the GBP -> USD trade) to any bank though -- e.g.., right back to your USD account at an exchange (e.g., Mt. Gox)
So this would be mostly only useful for someone that has a bank account in the originating currency. So someone in the UK wanting to arb the BTC/GBP on Intersango against the BTC/USD on Mt. Gox, this would probably work well. The problem is there are two sets of wire fees though, one for the transfer from Intersango to the bank and then again on the transfer from the bank to CurrencyFair.
There are a couple things that would solve this problem. The issuance of Redeemable Codes by the exchanges eliminates the need for a bank intermediary. Also, a low cost cash transfer service, such as what Dwolla gives for USDs complements or can be a substitute for the Redeemable Codes as well. If Barclay's PingIT, for example, could be used by Intersango to send GBP funds wouldn't that solve half the problem?
