As we see near-consensus economic forecasts pointing to a deep recession, JP Morgan Bank, one of the 4 largest banks in the United States, seems poised to re-enter the market riding the crypto-asset hype. Jamie Dimon, the chairman and chief executive of JP Morgan, predicts the bottom of the wave for the middle of next year, at least in the EUnited States, and the IMF abounds in this direction in support.
2023: analyst concession on a recession forecast
Jamie Dimon, the CEO of JP Morgan Chase, is very pessimistic about the economic future of his country in 2023. ” These are very, very serious issues, which I think will probably push the United States and the world – I mean, Europe is already in recession – into some kind of recession in six to nine months. “, he explained during a interview with the CNBC business channel. The last press releases issued by the IMF also go in this direction.
What role for the bank? It is there to facilitate exchanges and financial flows between economic agents, in the absence of exchanges, or even in the event of a slowdown in these exchanges, the bank sees its activity decline, or even stop.
Who says recession necessarily says decline in economic activity, therefore decline in financial flows and therefore in income from banking activities. Jamie Dimon’s objective is therefore to integrate new markets, and in particular those which have represented a strong reserve of liquidity. First with the ” Private Equity “, because according to the Preqin Ltd Report of 2017, $963 billion in cash then held by investment funds was waiting to be invested.
Something to rub your hands on for a financial service provider. It is in this context that Jamie Dimon, CEO of traditional bank JP Morgan Chase, announces that it wants to set up a payment solution based on the blockchain.
How are banks preparing for a downturn in economic activity?
Payment defaults represent a shortfall of 118 billion dollars a year. 66% of payment defaults come from a lack of information according to JP Morgan. Indeed, today, the quality of exchanges relies on the ability of banking establishments to coordinate, particularly on currencies and time zones, while using the SWIFT protocol.
The SWIFT protocol guides the formalism of exchanges, offers a secure messaging and file transfer service, but it is above all chargeable and does not offer interoperability between the banks’ networks. Would a simple standardized exchange of information then allow a potential gain of 80 billion dollars? That’s what Jamie Dimon seems to believe, announcing that his bank JP Morgan associates with Visa in order to link their respective private blockchains. This in order to improve communications and the exchange of information between the networks one of the largest banks in the world and VISA, the world leader in payment cards.
The objective is to be able to communicate their two networks, Liink (JP Morgan) and B2B Connect (Visa). We are talking here about the interoperability of private blockchain networks, with the aim of sharing more information and thus securing transactions to limit losses. Moreover, the new network, named Confirm, will have the ability to limit fraud by confirming that the recipient of the funds is indeed the holder of the credited account. Deutsche Bank has also stepped in to help with the strategic expansion of the Confirm blockchain.
With the appearance of the blockchain and cryptoassets, new financial solutions have appeared and, often, reliability and time saving are rightly put forward. Traditional finance players are therefore in a reactionary movement, and seek to internalize the points of added value that they see in crypto-assets.
But then, the one who, only a few days ago, described cryptocurrencies as ” Decentralized Ponzi scheme would he finally be convinced of the strength of the technology on which cryptoassets are sitting to the point of betting on his own private blockchain? Not sure. The objective here is clearly profit-oriented and the aim being to secure the bank’s assets and limit losses, but it is obvious that these are the solutions that appeared on the blockchain that meet these needs.
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