The Initial Trade
Financial giant Goldman Sachs conducted its first blockchain-based buyback using the rival bank JP Morgan’s private blockchain network.
According to Bloomberg reports of June 22, the initial trade occurred on June 17. They swapped a tokenized version of a U.S. Treasury bond for JPMCoin. It took three hours and five minutes to complete the transaction.
Digitalization of Transactions
JPMCoin is a stable coin and is pegged 1: 1 to the U.S. dollar.
According to the reports, Mathew McDermott, global head of digital assets for Goldman’s international markets division, sees this as a “pivotal moment for the digitization of transactional activity.”
He also said that this blockchain development was a massive boon to the repo market, given the way repos work, where cash and collateral are exchanged simultaneously and instantly. Additionally, the repo market has a value of over $4.6 trillion globally.
Changing the Intra-Day Marketplace
Repurchase agreements, or repos for short, are a form of short-term borrowing using government securities. However, they only purchase them back at an inflated price at some other time, ordinarily overnight. It is especially advantageous to banks as it enables them to borrow cheaply.
In conclusion, as they are paying interest per minute, McDermott believes that their step will change the nature of the intraday marketplace.
