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In the wake of Facebook, JP Morgan and the People’s Bank of China announcing plans to work on their own digital currencies, Goldman Sachs is the latest major player to enter the world of cryptocurrencies, potentially with their own coin.

Besides eliciting a strong reaction across the world, from enthusiasm among many crypto enthusiasts and open antagonism if not downright panic from traditional financial institutions and regulators, Facebook’s Libra seems to also have sparked off a willingness among international corporates and traditional players, such as banks, to enter the cryptocurrency world.

China is one of the most restrictive jurisdictions when it comes to digital assets, with active bans on Bitcoin and other cryptocurrencies, declaring these financial risks. It has recently been reported that the Chinese central bank is working on developing its own cryptocurrency in the face of potential dominance of the industry by Facebook’s Libra.

Reported in the South China Morning Post last week, Wang Xin, director of the People’s Bank of China’s research bureau has asked: “If [Libra] is widely used for payments, cross-border payments in particular, would it be able to function like money, and accordingly have a large influence on monetary policy, financial stability and the international monetary system?”

Furthermore, China is also concerned about the role that the USD will play in the composition of the Libra currency basket; Libra is to be linked to a basket of major currencies governed by a Swiss non-profit consortium, the Libra Association, which will include numerous companies including Visa, PayPal and Mastercard. This concern is in addition to concerns about the challenge that Libra might pose to financial sovereignty. Wang Xin pointed out: “There would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”

Similar concerns have been expressed by other jurisdictions and a logical conclusion to this could be that a number of other central banks will be working to develop their own digital currencies to try to counter the market dominance that Facebook’s Libra threatens to attain.

Like JP Morgan some weeks ago, there are indications that Goldman Sachs has started work on developing a digital asset. This stems from a recent job listing on the Goldman Sachs website; GS Accelerate – Digital Asset Project Manager for the building of brand new business ideas for Goldman Sachs. In particular, the responsibilities of this new post were of interest to crypto watchers, with these including “innovating the traditional financial services industry with new solutions”, the “development of comprehensive road maps for distributed ledger technology (DLT) development”, and “maintaining and iterating a complex project planning document with multiple stakeholders”.

The intention to develop its own cryptocurrency has not yet been confirmed by Goldman Sachs but it would be a logical progression for it to take up a similar position as that of JP Morgan Chase, who is launching the JMP Coin. The JPM Coin is planned to run on a private version of Ethereum and work as a stablecoin with fiat deposited in the bank to back it up. Initially it will be linked to the USD but it is expected to add other fiat currencies once the platform has been launched and tested.

With regulators and traditional financial institutions thoroughly shaken up by the possible dominance of Libra, it is likely that more moves of this nature will be seen in the near future. As regards Goldman Sachs, in an interview with Les Echos on 28thJune, CEO of Goldman Sachs, David Solomon said: “We do extensive research on the concept of tokenisation, the potential of which we believe, and which designates the creation through the blockchain of a stable digital currency based on a basket of real currencies that can move money across borders and without friction. This is the direction in which the payment system will go………Assume that all major financial institutions around the world are looking at the potential of tokenisation, stable wedge and frictionless payments.” He added: “Banks must remain innovative, otherwise they will disappear.”