On the 27 June, in the interview to the French Les Echos, David Solomon, Goldman Sachs CEO answered questions related tokenization and The Libra Project by Facebook. Many mass media presented his comments as if the finance giants intends to launch its own crypto currencies.
Here is what David Solomon actually said:
(Question) Facebook wants to launch its own currency and its own electronic wallet. Have you had discussions with them?
I cannot comment on any discussions we may have with our clients. What I can tell you is that I find the principle interesting.
We do extensive research on the concept of “tokenization”, the potential of which we believe in, it designates the creation through the blockchain of a stable digital currency based on a basket of real currencies that can move money across borders and without friction.
This is the direction in which the payment system will go. But as to whether it is this platform or one of the other fifty that people are followikg, that will make the most progress, I cannot tell you.
(Q) JP Morgan has launched its own virtual currency. Could you play a role in this disruption?
Absolutely! Many are looking in this direction. But it is too early to say which platform will prevail. Sheryl Sandberg [Facebook operations manager] herself says they are still very, very far from the launch. Assume that all major financial institutions around the world are looking at the potential of “tokenization”, “stable wedge” and frictionless payments.
Q) Do you think we need more regulation before going further?
I think regulators around the world are watching what’s going on. They wonder how it will work and are very attentive to payment flows. There will be a change in regulation, that’s for sure.
Q) Banks can disappear because of these new actors?
I do not think banks will disappear because of that. Admittedly, they will have to evolve, because the trades linked to the payment flows will become less profitable. But there are many other reasons why banks must remain innovative, otherwise they will disappear.
Q) One can imagine that Facebook [… ] starts with Libra and extends its financial activities to deposits?
Do you believe that the tech giants, who have other concerns for the moment, want to fall to the same regulatory constraints as JP Morgan […]? Of course, these companies have a lot of customers and will certainly try to monetize them. It seems to me, however, that they will try to seal partnerships with banks rather than become banks themselves. We are Apple’s partners in credit cards.
Q) They could become competitors on some trades …
Of course, but for that they will have to gain trust of the customers on big fundamental questions in terms of risk management, and financial capacity …