JP Morgan announces its very own cryptocoin

In an ironic twist JP Morgan has announced that it will launch a cryptocurrency tied to the US dollar. The coin will be called the JPM Coin and it will be used to make instantaneous payments using blockchain technology.

JPMorgan CEO Jamie Dimon in 2017 called bitcoin a fraud

Dimon later said he regretted his comments. Now JP Morgan has become the first major bank to have its own cryptocurrency. The bank said that it had created and successfully tested the cryptocurrency this month. So after becoming well known for his criticism of the foremost cryptocoin bitcoin Dimon now is CEO of the bank that has set a precedent for creating its own cryptocurrency.

JPM Coin will be a stable coin

Wikipedia describes a stable coin as follows: "Stablecoins are cryptocurrencies designed to minimize the effects of price volatility. To minimize volatility the value of a stablecoin can be pegged to a currency, or to exchange traded commodities (such as precious metals or industrial metals)."

The JPM coin's value is tied to the US dollar. Tether is an existing cryptocoin that is also tied to the US dollar. Its value stays close to the price of the dollar.

How the system will work

Umar Farooq, JP Morgan's head of Digital Treasury Services and Blockchain, says: "When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time."

The bank claimed that over time JPM Coin would be extended to other major currencies. When asked whether regulators would support the coin, the bank said that JPM Coin was a prototype at present. As it moves towards actual production the bank said it would actively work with regulators to get their feedback and receive any necessary approvals,

JP Morgan's official stance on cryptocurrencies

In its release, the bank included its official stance on currencies, one that contrasts with CEO Dimon's 2017 statements: "We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated."

Again there is a certain irony in their statement

JP Morgan report downplays benefits of blockchain technology

The report released just in January showed skepticism on some areas where many think the blockchain could improve current processes. The report claimed that the blockchain is unlikely to re-invent the global payments system but can only provide marginal improvements to various parts of the process. However, the report did admit that the blockchain would streamline and automate such cumbersome processes as trade financing.

In spite of its skepticism at times, the bank has been interested in the potential of blockchain technology back as far as 2015 and joined a group of banks interested in creating standards and protocols respecting the use of the blockchain in banking. However, it left the group less than two years later. However, in 2016 the company began a project in partnership with Digital Asset Holdings indicating they were still interested in block chain technology.

JP Morgan's "hidden" losses now $5.8 billion

   When the original losses were revealed back in May the losses were estimated at 2 billion. Now after an internal review the losses are estimated at 5.8 billion. However, the company also said that it is possible that there could be up to 1.7 billion more in the worst case scenario.
    As a result of this review there may be criminal charges against some traders. Traders deliberately placed incorrect values on trades CEO of  JP Morgan Jamie Dimon said:. "This has shaken our company to the core,"  Managers in the London office who made the trades have all been fired. The London office made huge bets on corporate debt using derivatives now called "the London Whale trades"  They resulted in a whale of a loss!
  In spite of the announcement of these huge losses the stock was actually up. This may seem counter intuitive but the company made nearly 5 billion last quarter and no doubt this outweighed worries about the loss. In his report Dimon also claimed that the situation was now under control. For more see this article.

J.P. Morgan CEO letter to shareholders has negative remarks about Arab Spring

The annual report of J.P. Morgan to shareholders can be found here. It is written by Jamie Dimon the chief executive officer (CEO).

Dimon notes the economic uncertainty clouding the economic future. He also notes events that have impeded economic recovery such as the tsunami and earthquake in Japan and the European debt crisis.

However, he also mentions revolutions in the Middle East, the Arab Spring. He speaks of all of these as tragic events and unfortunate setbacks.

Even if one construes Dimon as referring to the Arab Spring events as tragic setbacks this seems unduly negative. While it is true that in purely economic terms such as growth in GDP these did involve lesser growth than might have happened under the regime of Mubarak or in Tunisia, surely the overall political effects were positive enough to outweigh the economic consequences.

Perhaps the Arab Spring caused an unfortunate rise in oil prices as well but this also is hardly reason to describe the changes brought about as unfortunate. Perhaps if democratic change hurts capital then it is a tragic setback. For more see this article.