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Major international banks are teaming up with the New York Federal Reserve for a 12-week digital dollar pilot that will attempt to quantify the impact of digital dollar tokens and how their presence in a common database can help speed up payments.
Along with payments major Mastercard MA, participating institutions include Citigroup C, HSBC HSBC, BNY Mellon BK, and Wells Fargo WFC.
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The regulated liability network, or RLN, is a platform that banks can use to issue tokens that reflect customer deposits that are settled on a central bank reserve on a shared distributed ledger.
The 12-week proof-of-concept pilot program will investigate the application of this platform.
Only simulated data will be used in the project’s test environment.
Central Banks Developing Their Own Digital Currencies
In addition to testing wholesale CBDCs, which are fiat money in token form for exchange among financial institutions, many central banks are also developing or considering retail central bank digital currencies (forms of digital money intended for the general public).
The tests are meant to improve the clearing and settlement processes currently in place.
“It (the project) is not intended to advance any specific policy outcome, nor is it intended to signal 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. The findings of the pilot project will be released after it concludes,” a statement released by the New York Fed stated.
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Image and article originally from www.benzinga.com. Read the original article here.