The 12-week digital dollar experiment program will see the New York Federal Reserve Bank in partnership with banking institutions test the viability of using a shared ledger for interbank transactions.
The Federal Reserve Bank of New York announced on Tuesday that it is beginning a digital dollar experiment with major banks to test the viability of using a shared ledger for interbank transactions from a practical and legal standpoint.
The interbank messaging system SWIFT, Bank of New York Mellon, Citibank, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo are a few of the financial institutions taking part in the trial with the New York Fed’s innovation center, they said in a statement.
A statement listed the banks involved and the project’s details, which were first published by Reuters. According to the New York Fed, the 12 weeks project, known as the regulated liability network, will be carried out in a test setting and employ simulated data.
In the pilot, banks’ ability to speed up payments by employing digital dollar tokens stored in a single database will be examined.
Michelle Neal, head of the New York Fed’s market group, stated earlier this month that the central bank sees promise in adopting a digital dollar to shorten settlement times in currency markets.
The New York Fed stated on its website that “current designs for exchange mechanisms based on distributed ledger technology do not enable interoperable transfer and settlement of digital assets between regulated financial institutions.”
