JPMorgan Alerts of the Disruptive Capacity of Digital Currency to US Influence

JPMorgan Alerts of the Disruptive Capacity of Digital Currency to US Influence

JPMorgan Chase & Co cautions the US that the possible disruption of digital currency may affect the economy.

On Friday 22 May, analysts from the massive international investment firm, JPMorgan Chase, informed Bloomberg News that “there is no country with more to lose than the United States from the disruptive capacity of digital currency.”

The study’s authors include US chief economist Michael Feroli and JPMorgan, Josh Younger, head of U.S. interest rate derivatives strategy.

The analysis reveals that although the US dollar may continue to stay as a global reserve currency, other monetary factors are “quite unstable.” The two shortcomings are in-trade settlement and SWIFT messaging system.

In 2018, the US administration has used SWIFT messaging system to prevent access to payments from certain Iranian banks. This has created a divide between the US and the EU, which is an ally. At the time it was regarded as an infringement of EU law.

The experts predict the US may lose its global geopolitical supremacy if more countries found a way around SWIFT (e.g., using crypto). They finished by saying “Digital currency is an exercise in geopolitical risk management for high-income countries and especially the U.S.”

A similar message roared from an ING economist earlier in March.

Hardly Any Drastic Consequences for the Finance Industry
There are appropriate instances for the central bank to implement digital currencies, according to JP Morgan, but there may not be any drastic consequences.

The bank also thinks the US dollar’s global dominance can’t be overthrown overnight, the key areas remain “most unstable.”

Providing an international money transfer system implemented on top of a digital dollar would be a modest investment, particularly if structured to moderately affect the architecture of the domestic financial system, to safeguard a key means of project role in the world economy,” the study notes.

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