JPMorgan Chase and consultants Oliver Wyman took a look at blockchain technology in commercial banking in a report released Feb. 9. Stablecoins and central bank digital currencies have dominated in the sphere so far, but the authors point out the advantages offered by deposit coins in terms of stability and reliability.
“Given that deposit tokens are commercial bank money embodied in a new technical form, they sit comfortably as part of the banking ecosystem, subject to regulation and supervision applicable to commercial banks today.” Stablecoins compare poorly in this regard due to the lack of standards for reserves and lack of clarity around redemption rights. In addition, there is a risk of contagion in the event of a run on a stablecoin, while deposit coins, as “extensions of traditional deposits,” might be expected to resist that stress:
Deposit tokens are issued on a blockchain by a depository institution to represent a deposit claim. This contrasts with stablecoins, commonly issued by a non-bank private entity, and CBDC. This difference in the issuer is a key advantage... bitcoin
Imagine if you could get a liquidity token for your bank account and exchange it for an ETF token.
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