Wednesday, December 8

Banks must integrate digital currencies with BCs, says analyst at JPMorgan


For the JPMorgan analyst who attended the BCB event this Thursday (11), commercial banks should not create their own digital currencies without integrating them with central banks.

This was the penultimate event about the digital Real to be promoted by Bacen in 2021, in a series of public discussions on the subject.

The guests of this edition were Andrew McCormack (BIS/Singapore), Claudine Hurman (Bank of France) and Naveen Mallela (Onyx – JP Morgan Chase & Co), who were able to talk about several subjects they believe will influence the issuance of digital coins by central banks and their relationship with currencies of other countries.

Head of JPMorgan does not believe banks should create their own currencies without integration with BCs

JPMorgan’s global head of currency systems, Naveen Mallela, participated in the event with the Central Bank of Brazil, where he can talk more about what he believes should happen in the future.

At one point, he was asked how he sees the relationship of commercial banks with the digital currencies that are operating with CBDCs. In response, the head of JPMorgan said that the commercial bank structure with central banks will eventually migrate to the digital sector.

In addition, Naveen said he sees problems with banks having their own independent currencies, as disruptions in the money’s interoperability process can occur. He recalled that JPMorgan has created a currency, JPCoin, but that it is still linked to central bank money.

According to the money specialist’s view, the central bank must still ensure that institutions communicate, and this is unlikely to change even with the arrival of the CBDCs.

“The JPMorgan currency creation it is safe because the stable bank that is using blockchain. The objective of a digital currency from a commercial point of view is like a variation of the deposit system, that is exactly what JPMorgan seeks, that is, an interoperability between our currency and the CBDCs among the various types of users.”

Director of the Central Bank of France believes there is a lot of work to be done

The director of the Bank of France, Claudine Hurman, believes that the world should think about several CDBC fronts, with a lot of work still to be done.

According to her, central banks will have many roles to play, whether from the point of view of regulation and innovation. But she believes that the initiatives should help to send money easily and at low costs.

In future studies, she believes that central banks should support the entire CBDC process, mainly to maintain control of the currency.

Andrew McCormack, from BIS, recalled that each CBDC will be designed for the national market, analyzed by each country. So, he believes that the integration of cross-border currencies may differ, but still, with advantages for participating countries.

According to him, a platform should be put in place with strong supervision, with standardized rules and extensive monitoring of money laundering, but with advantages in international trade.

The event was organized by the Central Bank of Brazil and may discuss international aspects of the so-called digital Real, a kind of CBDC that the country wants to create in the coming years.





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