R3 Shrinks Again as Morgan Departs

R3 is upset and maybe that’s because it has realized in aggregate what the current round of departures really mean.

Goldman Sachs and now JP Morgan have exited the consortium and, ultimately, there may be fewer banks in the future than there are now.

That’s because if central banks build cryptocurrencies and blockchain general ledgers then they may not need a large distribution arm. They may do some direct communication and lending to individuals.

Central banks would have to be larger than they are now, but so what. So called private banks already work for central banks. All you would have to do is absorb them.

Thus the amount of banks, even commercial banks, may be whittled down. Goldman left and now JP Morgan has officially departed as well. Banco Santander exited last year with Goldman.

JP Morgan was one of the founding members of R3. R3 managing director Charley Cooper was quoted as saying, “JP Morgan parted ways with R3 to pursue a very distinct technology path which is at odds with what the global financial services industry, represented by our 80-plus members, have chosen.”

JP Morgan is an “outlier” currently but is also one of the banks that will likely survive any downsizing. Some other R3 banks may not be so lucky.

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