Daily Management Review

Banks are looking for ways to join the bitcoin movement


At first, bitcoin was a technology for making payments without intermediaries. Now, when the first crypto currency holds more than $ 100 billion, banks are discussing how to take advantage of this.

BTC Keychain
BTC Keychain
The largest investment bank Goldman Sachs adheres to the position that the crypto currency can be used already now, and is considering a possibility of trading Bitcoin. The final decision has not been made yet. 

In his Twitter, Goldman Sachs CEO Lloyd Blankfein explained he hasn’t decided anything regarding Bitcoin and is still studying the crypto currency. Although the investment bank plans to engage in Bitcoin trade, an unambiguous attitude to the concept has not yet taken shape. "I neither support, nor deny it, I only know that once people were skeptical about the idea of replacing gold with paper money," Blankfein wrote.

According to industry consultants, other global investment banks are also looking for ways to tap deals with Bitcoins and other crypto-currencies. For the current year, Bitcoin has grown by more than 300%, which attracted attention of hedge funds and wealthy people.

In the case of Bitcoin, Wall Street will have to solve a number of difficult questions: how can banks that are legally required to prevent money laundering maintain a currency that is not emitted by any government and that allows crypto currency holders to remain anonymous?

The debate over bitcoin has recently gained momentum. Head of JPMorgan Chase & Co Jamie Dimon called the crypto currency a "fraud" and said that it is "worse than tulip bulbs."

He also added that he would fire anyone trades in virtual currency in his company. On the same day, the price of Bitcoin fell by 11%. During an interview on CNBC India, Dimon stated the following: "They create something out of nothing, in my opinion, it costs nothing."

Ray Dalio, the founder of the world's largest hedge fund, hold the same critical attitude. The founder of Bridgewater Associates said that Bitcoin is not the best investment. It is difficult to conduct transactions with the currency, these are the two criteria that Dalio considers important for any currency.

James Gorman of Morgan Stanley is more moderate about the crypto currency than Daimon and Dalio. At a conference that took place on September 27, he said that Bitcoin is "certainly more than just a fad." And despite the fact that Gorman claims that he sees the potential in crypto-currencies, he has not yet invested in them.

Christine Lagarde said that Bitcoin and other crypto-currencies do not pose a threat to the world's central banks and currency currencies. Head of the International Monetary Fund (IMF) believes that crypto currencies can replace the dollar in developing countries with weak national currencies.

According to her, Bitcoin can replace the currency of other states, for example, dollars and euros, in countries with an unstable economy and unstable national currency. "The use of virtual currency may increase in some of these countries, let's call it" De-dollarization 2.0, " she said, speaking in London at a conference on the 20th anniversary of the Bank of England's independence.

According to her, the growing popularity of crypto-currency may affect the economic processes, as well as the strategy of countries in the monetary sphere. "The best response from central banks will be the continuation of effective monetary policy, openness to new ideas and new requirements as the economy develops," Lagarde noted.

Although "many crypto-currencies are too opaque for regulators, and some are subjected to hacker attacks, much of this is due to technical problems that can be solved over time," she added.

World central banks should not ignore crypto-currencies, whose popularity is growing rapidly, according to the report of the Bank for International Settlements (BIS). "The problem of whether a Central Bank should provide a digital analogue of money as an alternative to cash is extremely important in countries that actively stimulate the cash turnover, for example, Sweden. Ultimately the entire world's Central Banks will have to decide whether to launch their own crypto-currencies for settlements in retail and wholesale sphere taking into account the conditions in each country," the bank's quarterly report says.

source: bloomberg.com