[yingw787]

> skirt their fractional reserve requirements.

...wait you can just do that? Just declare a "thing" to equivalent but not identical by reference to a dollar and go around laws using dollars because you technically aren't using the dollar?

Yeah that's terrifying.

[elliekelly]

> ...wait you can just do that? Just declare a "thing" to equivalent but not identical by reference to a dollar and go around laws using dollars because you technically aren't using the dollar?

Yes, they're basically taking dollars out of demand deposit accounts and putting them into brokerage accounts. Demand deposit accounts are liquid, guaranteed with FDIC insurance, and the account holder is entitled to the funds at any time. JPM Coin is theoretically liquid and "guaranteed" by JPM in the form of a promise to purchase it for at least $1 (up until they can't of course) but from the article it seems the funds won't be immediately available to account holders:

> Purchases and redemptions may not always be immediate, but once converted to JPMCoin, transfers should be quick and error-free.

The benefit of JPM Coin for JPM is a quicker/cheaper way to facilitate transfers between and among their various legal entities while also reducing the bank entity's total deposits (which in turn reduces the bank's capital and reserve requirements).

The benefit of JPM Coin for JPM customers on the other hand, is not immediately obvious to me.

[yingw787]

I mean for things like CDs and savings accounts, JPM Coin is irrelevant. I'm concerned more if JPM decides to use JPM Coin for higher-risk activities. What happens if they decide they would treat a supply of JPM Coin as a supply of USD, with the knowledge that if things go south, they could change the value of the pegged psuedo-currency and get a slap on the wrist?

Every bank could then conceivably be a central bank, except as a central bank that is profit-driven.

[lucozade]

> Yeah that's terrifying.

Except they're not doing anything of the sort. They've created a stablecoin backed by their balance sheet. They plan to use it for reducing the friction on payments and payment like processes.

That's it pretty much. TBH if JPM were going to attempt a major violation of their regulatory constraints, I'd expect them not to publish it on their website.

[seppin]

Nope you can't, unless you can convince everyone else that "thing" is just as good, and can be exchanged for USD at any time, which it can't.

[yingw787]

I mean I can't, but JPM might be able to. JPM's an organization with enough significance to the financial system that they (IMHO) could conceivably make people accept one truth that 1 JPM coin == 1 USD.

And it is. Until it isn't.

[seppin]

Best case scenario is that they convince people to treat their thing with value in their sandbox to reduce fees and improve performance for a specific business case (B-2-B payments for example). Or in the case of JPM Coin, they back it with deposits and no value trust is needed. Just limited application.

Think like Disney bucks, but a larger scale.