February 14, 2019 11:17 PM
Until now, global banks and corporations have relied on traditional wires to transfer value. J.P. Morgan’s digital coin, the JPM Coin, is poised to change that.
Picture this: You're the treasurer of a giant oil refinery who needs confirmation that a payment to the crude producer based overseas went through. A tanker full of crude is sitting in the Gulf of Mexico, also waiting for payment confirmation before it can head into port. Time, of course, is money, and in this case, worth well into the millions.
You, the anxious treasurer, had previously given your primary commercial-services bank instructions to make a wire transfer on your behalf. But that was 28 hours ago. Everyone's still waiting. If the wire doesn't confirm in the next three hours, a big transaction could be foiled. You will catch an earful, at the very least.
Enter J.P. Morgan with a novel way to rescue the treasurers in this boat. The JPM Coin, which the bank announced today, is a digital coin representing US dollars held in designated accounts at JPMorgan Chase. This program is in test phase for now. But because JPM already "banks" 80 percent of the Fortune 500, veritably all companies with large and frequent money transfer requirements will eventually be able to tap into J.P. Morgan's treasury services, either directly or via a US payments system on-ramp.[1][2]
Each JPM Coin is 1:1 redeemable in fiat currency held by J.P. Morgan (e.g., USD). As such, the coin's value shouldn't fluctuate, similar in concept to so-called stablecoins. Moreover, each JPM Coin represents fiat currency and as such is designed to instantaneously transfer value. This is uplifting news for institutions and companies who have long been tethered to traditional money transfer mechanisms.
