New York Fed Partners with US Banks on 3-Month Digital Dollar Project

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New York Fed Partners with US Banks on 3-Month Digital Dollar Project

<p class="MsoNormal">The Federal Reserve Bank of New York's Innovation Centre (NYIC) in partnership with some US banking giants has kickoff a three-month digital dollar proof-of-concept (PoC) project. </p><p class="MsoNormal">This project "will explore the feasibility of an interoperable digital money platform known as the Regulated Liability Network (RLN)," the US banking community noted. The goal of the project, the reserve bank <a href="https://www.newyorkfed.org/newsevents/news/financial-services-and-infrastructure/2022/20221115">explained </a>on Tuesday, is to "explore the feasibility of an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger."</p><blockquote class="twitter-tweet"><p dir="ltr" lang="en">The NYIC is participating in a proof-of-concept project with members of the private sector to explore the feasibility of an interoperable network of digital central bank liabilities and commercial bank digital money using distributed ledger technology. <a href="https://t.co/lxUorvd5U7">https://t.co/lxUorvd5U7</a></p>-- New York Fed (@NewYorkFed) <a href="https://twitter.com/NewYorkFed/status/1592608119271886848?ref_src=twsrc%5Etfw">November 15, 2022</a></blockquote><p class="MsoNormal">Participating Banks</p><p class="MsoNormal">Some of the major banks and financial institutions participating in the projects are BNY Mellon, Citi, HSBC, Wells Fargo, PNC Bank, TD Bank, Truist, U.S. Bank and Mastercard, among others. International messaging service provider, SWIFT, is also a part of the project. These organizations are to issue simulated digital money or tokens and settle transactions on them through simulated central bank reserves on the ledger. </p><p class="MsoNormal">"The PoC will also test the feasibility of a programmable digital money design that is potentially extensible to other digital assets, as well as the viability of the proposed system within existing laws and regulations," the banks <a href="https://www.businesswire.com/news/home/20221115005936/en/Members-of-the-U.S.-Banking-Community-Launch-Proof-of-Concept-For-A-Regulated-Digital-Asset-Settlement-Platform">explained</a> in a join-statement. NYIC added that the project will be conducted in a test environment and will adopt only simulated data. </p><p class="MsoNormal">In addition, the Center clarified that the project is not targeted at advancing any specific policy outcome. On top of that, the project does not mean that  the Federal Reserve "will make any imminent decisions about the appropriateness of issuing a retail or wholesale CBDC, nor how one would necessarily be designed."</p><p class="MsoNormal">Digital Euro Pilot </p><p class="MsoNormal">The launch of the new digital dollar project comes days after <a href="https://www.financemagnates.com/fintech/spanish-banks-embark-on-new-digital-euro-test/">up to 30 Spanish banks partnered</a> to carry out new PoC trials to measure the impact of issuing a digital euro by the European Central Bank (ECB). The Spanish banking community project comes almost two months after <a href="https://www.financemagnates.com/fintech/ecb-selects-amazon-nexi-others-fordigital-euro-prototype-excercise/">the ECB  selected five companies</a> including Amazon to participate in a digital euro payment prototyping exercise. </p><p class="MsoNormal">The prototyping exercise, which will focus on different specific payment usage of the digital euro, is part of the ECB's two-year digital euro investigation project. The exercise is expected to be completed during the first quarter of 2023.</p>

This article was written by Solomon Oladipupo at www.financemagnates.com.

Source: New York Fed Partners with US Banks on 3-Month Digital Dollar Project