The Federal Reserve Bank of New York successfully completed tests with a digital dollar. The DLT technology could supportinnovation in the paymentsaccording to the American institution.
The New York Innovation Center (NYIC) of the New York Fed, one of the twelve Federal Reserve Banks in the United States, announced on Thursday the results of a proof of concept (PoC) to examine the feasibility of a payment system based on a central bank digital currencyalso known as CBDC.
More specifically, the proof of concept was based on a Wholesale CBDCa digital dollar reserved exclusively for businesses and banks.
Although existing payment systems operate efficiently, some frictions remain, including speed, cost, accessibility and settlement process. This proof of concept explored the feasibility of distributed ledger technology to support secure and efficient payments,” the institution said in a statement.
The PoC made it possible to experiment with national interbank payments. Transactions were carried out with “commercial bank deposit tokens” and settled using a “ theoretical wholesale central bank digital currency (wCBDC) “. The NYIC has also successfully cross-border payments in dollars with other banks.
DLT technology is seen by the American institution as a “potential solution to support theinnovation in the field of payment “. A wCBDCcombined with “commercial bank deposit tokens”, offers near-real-time transaction settlement, according to the company.
The system has also demonstrated its ” programmability “thanks to smart contracts which could enable “efficient liquidity management”.
The proof-of-concept is not intended to advance specific policy outcomes, nor to signal that the Federal Reserve will make imminent decisions about whether to issue a central bank digital currency,” NYIC concludes.
Last year, the Vice Chairman of the Federal Reserve stated that the creation of a CBDC would require a minimum of 5 years due to the complexity of such a project.
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