JPMorgan: “government cryptocurrencies should not swallow commercial financial systems”

According to JPMorgan analysts, the danger of government cryptocurrencies is that consumers will withdraw money from banks, and this will undermine the foundations of financing commercial banks.

According to Bloomberg, citing a report by JPMorgan strategist Josh Younger, the risk of launching government cryptocurrencies is that bank customers will transfer money from checking accounts to government cryptocurrency accounts, which could lead to an outflow of 30% of the funding base of commercial banks.

“Relatively tight ownership restrictions will be needed to reduce the utility of retail government cryptocurrency as a store of value,” Younger wrote.

Younger proposed a $ 2,500 limit. This would satisfy the needs of low-income households, but would not have a major impact on the financing structure of commercial banks, given that most of these households have less than $ 1,000 in current accounts.

“If each of these depositors kept only retail government cryptocurrency in their account, then this would not have a significant impact on the financing of banks,” he wrote.

A hypothetical conflict between central and commercial banks over consumer deposits is often seen as one of the risks of launching a state-owned cryptocurrency. If consumers put all their money in a central bank account, it would prevent commercial banks from offering loans and mortgages, which would have an indirect effect on the economy as a whole.

Bank of America analysts recently said government cryptocurrencies could form “a much more efficient payment system than cash,” and also reduce the popularity of stablecoins.