Goldman Sachs is turning towards digital assets and is testing the possibility of creating its own fiat digital currency.
The multinational American investment bank might introduce its own stablecoin in the future, its new global head of digital assets Matthew McDermott revealed in his interview to CNBC this Thursday.
Newly appointed McDermott, which previously ran the Goldman Sachs’ internal funding operations and is “a veteran of old-school financing markets”, declared the bank was exploring the possibility of launching its own digital asset:
We are exploring the commercial viability of creating our own fiat digital token, but it’s early days as we continue to work through the potential use cases.
In other words, Goldman Sachs is considering issuing its own digital currency, most probably a stablecoin, pegged to the US dollar, as the investment giant is an American company. Stablecoin meanwhile, is a type of digital currency that attempts to offer price stability and is backed by reserve assets, usually fiat currency.
The bank is simultaneously expanding its digital asset team with London-based McDermott hiring strategic level experts both in Asia and Europe. According to CNBC, JPMorgan’s head of the digital asset strategy also joined the team of Goldman Sachs.
McDermott further claimed there would be a disruption to the existing status quo of the traditional financial institutions as the technologies are evolving and advancing:
In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on-chain. So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitization, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.
According to him, institutional investors, like custody companies, are already actively entering the digital asset markets and investing in related projects. He further admitted that interest in digital coins has shifted from retail investors to institutional ones during the last years, as numbers of large institutional clients are entering the cryptocurrency space.
When issued the stablecoin of Goldman Sachs won’t be, however, the first stablecoin distributed by the traditional bank. The bank’s main competitor JPMorgan has launched its JPM Coin at the beginning of 2019.
Central banks of the countries worldwide are also on the way to issue their local Central Bank Digital Coins (CBDC). Italy, France, and the Netherlands tend to participate in the European joint digital Euro CBDC project. Great Britain is considering the issuance of the digital pound. Meanwhile, European Union member country Lithuania became the first one to issue the world’s first collectible CBDC.