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Banks consider following JPMorgan into digital currency, says IBM

Bloomberg/ Luke MacGregor

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In February, JPMorgan, the largest US bank by assets, announced that it would issue a digital currency tied to the dollar, called JPM Coin.

Tuesday 19, March 2019

(Bloomberg) --International Business Machines, a provider of technology for creating digital currency, said at least two major US banks are considering whether to follow JPMorgan Chase’s lead in issuing a coin.

Jesse Lund, IBM’s Vice President of Blockchain, said that the company has held initial discussions with the two lenders on issuing a so-called stablecoin -- a digital token that is pegged 1:1 to an established currency like the US dollar.

 “We have received interest on the heels of JPM Coin,” Lund said in a phone interview. The two other banks “reached out to us after that announcement.” He declined to name the banks.

Digital coins can enable instantaneous transfers of funds between institutional accounts, reducing settlement times and making it easier to move money internationally. JPMorgan, which moves more than $5 trillion in wholesale payments each day, said its coin will use its own private blockchain to speed payments among corporate customers.

IBM said it is also working with six non-US banks on digital currencies. Among them are BNK Financial Group’s Busan Bank in South Korea, and in the Philippines, Rizal Commercial Banking, which is expected to issue a stablecoin in the second quarter, Lund said. The banks are awaiting approvals from regulators.

Coins issued by the international banks can run on IBM’s new Blockchain World Wire network, which was introduced on Monday. The digital currencies can be used to settle transactions between customers of different banks. By loaning the coins, banks can earn interest income and charge transaction fees, Lund said.

“there is a new revenue opportunity for banks,” he said. “Banks are now starting to catch the buzz.”

Stablecoins have become popular in the past year as wild drops in cryptocurrency prices prompted traders to seek out safer alternatives. that is led to the rise of stablecoin king Tether, as well as the launch of a slew of other stablecoins for retail and corporate users.


TAGS : JPM Coin, stablecoin, JP Morgan, IBM, Blockchain World Wire network, Busan Bank, Rizal Commercial Banking

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