American multinational investment bank and financial services company Goldman Sachs’ recently-appointed Global Head of Digital Assets says that his firm is exploring the idea of creating its own “fiat digital token.”
According to his Linkedin profile, McDermott, who has been with Goldman Sachs for almost 15 years, became the firm’s Global Head of Digital Assets in June, and before that, for almost 10 years, he was its Global Head of Cross Asset Financing.
In a report published on Thursday (August 6), CNBC says that McDermott was a replacement for Justin Schmidt, “an MIT-educated former crypto trader and quant who ran Goldman’s digital assets team since 2018.”
In an interview with CNBC, McDermott talked about his vision for a blockchain-powered financial system:
“In the next five to 10 years, you could see a financial system where all assets and liabilities are native to a blockchain, with all transactions natively happening on chain.
“So what you’re doing today in the physical world, you just do digitally, creating huge efficiencies. And that can be debt issuances, securitization, loan origination; essentially you’ll have a digital financial markets ecosystem, the options are pretty vast.”
Apparently, McDermott is “expanding his team, doubling its headcount with hires in Asia and Europe”, with one of the most recent hires being Cambridge-educated Oli Harris, who was JPMorgan Chase’s Head of Digital-Assets Strategy and Quorum between May 2018 and July 2020.
Two of the most interesting projects that run on Quorum (which is a permissioned-variant of Ethereum) are JPM Coin and Interbank Information Network.
CNBC says that McDermott’s first goal is “helping the essential plumbing of finance like repurchase agreements, known as the repo market, go digital,” and he went on to explain what he means:
“In securities finance and repo, if you look at those markets, they’re ripe for standardization.
“There’s a lot of legacy processes in the vast movement of collateral that makes them very cost inefficient, so by leveraging distributed ledger technology, you can standardize processes to manage collateral across the system, and you have a much more efficient settlement process given the real time settlement.”
Later, McDermott plans to investigate “how ledger technology can be used in the massive credit and mortgage markets, and even the possibility that trading markets could eventually migrate to the format.”
McDermott says he realizes the importance of “building consensus with other banks, institutional investors and regulators,” and that’s why he has recently been talking to both JPMorgan Chase and Facebook.
McDermott also mentioned in this interview that Goldman Sachs could launch its own stablecoin:
“We are exploring the commercial viability of creating our own fiat digital token, but it’s early days as we continue to work through the potential use cases.”
As far as cryptocurrencies are concerned, he made this very interesting comment:
“We’ve definitely seen an uptick in interest across some of our institutional clients who are exploring how they can participate in this space. It definitely feels like there is a resurgence of interest in cryptocurrencies.”
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.