Nine major financial institutions and the Federal Reserve Bank York , launched a digital dollar proof-of-concept experiment to see if distributed ledger technology could improve payments between central banks, commercial banks, and regulated non-banks. The New York Fed details that the proof of concept was conducted in a test environment and leveraged only simulated data. The central bank’s New York branch further argues that the test “is not intended to advance the outcome of any particular policy.”
New York Fed Releases 12-Week Proof-of-Concept to Test Banks’ Regulatory Responsibility Network
Phase 1 of New York’s Digital Dollar Experiment Called “Project Cedar” has been completed. The New York branch of the Central Bank is the second Central Bank Digital Currency (CBDC) project after MIT and the Federal Reserve Bank of Boston’s “Project Hamilton” project. According to the latest report on Project Cedar, the first phase of testing showed the wholesale central bank digital currency (WCBDC) demonstrated “immediate and atomic settlement.”
WCBDC testing uses software developed in the Rust programming language, distributed ledger BTCunused transaction output (UTXO) transaction model. Following successful testing, the New York Fed and “Members of the U.S. Banking Community” announced that they will launch a proof of concept (PoC) of a regulated digital asset settlement platform on November 15, 2022. The bank’s PoC is described in an “interoperable digital money platform known as the Regulatory Responsibility Network (RLN)” press release:
In a 12-week PoC , testing a version of the RLN design that works exclusively with US dollars, where a commercial bank issues simulated digital money or “tokens”.
The list of financial institutions participating in the pilot program includes Wells Fargo, Citi, HSBC, Mastercard, BNY Mellon, U.S. Bank, PNC Bank, TD Bank and Truist. . The New York Innovation Center (NYIC) and Swift are also collaborating on PoC efforts. The pilot leverages Amazon Web Services, with technology provided by his SETL and Digital Asset. Legal services are handled by Sullivan & Cromwell LLP and the project utilizes Deloitte for advisory services.
The announcement claims that the Digital Dollar Project does not imply the launch of his CBDC in the United States or “the outcome of any particular policy”
CBDC development. Some say the US is lagging behind when it comes to to other countries like China. Developed by China’s central bank, the People’s Bank of China, CBDC has penetrated mainstream payment methods far beyond the payments experimentation of top Chinese banks.
In 2021, Federal Reserve Chairman Jerome Powell told the public that he does not believe the US is lagging behind in his CBDC arena. “I don’t think we’re late,” Powell said at the time. About a year later, when Powell spoke on a panel discussion about the digital dollar, even if the Fed wanted to use a CBDC, Congress
“This is a process that will take at least several years to build public confidence in our analysis and final conclusions.” We see it as work,” Powell said at the end of September this year.
As far as the New York Fed’s Digital Dollar Project is concerned, this announcement is intended to indicate that the PoC is not intended to lead to official U.S. government policy decisions. emphasized. Launch of CBDC. “This is not intended to advance any particular policy outcome, but rather to the Federal Reserve’s view of the adequacy of issuing retail or wholesale CBDCs and how CBDCs should be designed. Nor does it imply that we will make any imminent decisions about
“The NYIC looks forward to working with members of the banking community to advance research on the tokenization of assets and the future of financial market infrastructure in the United States as money and banking evolve.” “,” Per von Zelowitz Director NYIC said in another statement issued by the New York Innovation Center.
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