JP Morgan: The foundations for digital money are there, but block-chain banking still needs years

The US investment bank JP Morgan Chase concludes in a recent report that the current developments in block chains are laying the foundations for digital money, but that a comprehensive introduction is still years away. The report published by JP Morgan on 21 February suggests that the financial industry will go far beyond block chain technology.

Block chaining in banking still needs years

According to the study, the basis for the general introduction of block chains, fast payments and digital currencies has already been established. According to JP Morgan, it will take another three to five years before block chains are introduced in the banking industry. However, the bank also believes that projects like Facebook’s Libra-Stablecoin require a higher degree of centralisation:

“For a stablecoin like Libra to be successful, it is likely to need short-term liquidity facilities, a source of positive interest-bearing reserves and fewer distributed, semi-private networks.”

Report showing signs of maturity

According to the report, the crypto-currency market is showing signs of maturity, such as increasing institutional participation and the introduction of new products on regulated exchanges.

However, the researchers also point out that crypto assets continue to show extreme price volatility, and stress that Bitcoin (BTC) has already shown its intrinsic value, but has yet to demonstrate its usefulness in portfolio diversification. The document states:

“Developments over the past year have not changed our reservations about the limited role that crypto currencies play in global portfolio diversification or as a hedging tool.”


JP Morgan’s relationship with crypto and Blockchain

JP Morgan itself is one of the banks involved in the development of block-chain and crypto assets. In June 2019, its Head of Digital Financial Services and Blockchain Umar Farooq said the company intends to test its digital currency JPM Coin with selected customers before the beginning of the current year.

Earlier this month it was reported that JP Morgan is also considering merging its own block chain platform with that of a large Ethereum-focused company, ConsenSys.