Goldman Sachs’ chief executive officer David Solomon said in an interview with the French newspaper Les Echos newspaper that he is “absolutely’’ considering and currently researching the use of digital currencies.
“Assume that all major financial institutions around the world are looking at the potential of tokenization, stable coins and frictionless payments,’’ said Solomon.
The process involves so-called “tokenization,” which is a process that effectively changes currencies or assets into tradeable digital contracts carried on a blockchain.
The CEO also told the newspaper that he would not comment on the possibility that he’d been talking to executives at Facebook about the decision. He noted during the interview, however, that blockchain-based stable coins tied to real currencies are “the direction in which the payment system will go.’’
Solomon “expressed his belief in the potential of blockchain-based digital currency in enabling frictionless cross-border payments. Similar to JP Morgan, Goldman Sachs believes such a currency will need to be backed by actual fiat currencies,” according to thenextweb.com.
Solomon added in the Les Echos interview, “Do you believe that the tech giants, who have other concerns for the moment, want to submit to the same regulatory constraints as JPMorgan or Goldman Sachs? Of course, these companies have a lot of customers and will certainly try to monetize them. It seems to me, however, that they will try to seal partnerships with banks rather than become banks themselves… Many people are looking in this direction. But it is too early to say which platform will prevail. Whether [Facebook] is this platform or one of the other fifty that people are watching that will make the most progress, I cannot tell you.”
Goldman Sachs “believes that big financial players will seek to digitally tokenize their operations to reduce costs and serve clients better, according to a person with knowledge of Goldman’s position,” reported CNBC. “J.P. Morgan said in February it has created the “JPM Coin,” a digital token that will be used to instantly settle transactions between clients of its wholesale payments business. Facebook last week also unveiled a plan to create a new digital currency called Libra. Solomon said regulators across the world are considering how blockchain will work and are attentive to the flux of payments. “There will be an evolution in regulation, that’s certain,” he said.”
Goldman’s plan of launching cryptocurrency “will likely further diversify its revenue base. The company has been trying to digitize operations for quite some time. In 2016, it had launched online bank–Marcus by Goldman–which has been delivering promising results,” noted Nasdaq.com. “Amid disappointing capital markets performance, Goldman’s efforts to diversify will support profitability. The stock has rallied 19% over the past six months, outperforming the rise of 6.4% for the industry it belongs to.”
