A 12-week proof-of-concept CBDC pilot will test the “technical feasibility, legal viability, and business applicability of distributed ledger technology.”
The Federal Reserve Bank of New York (FRBNY), one of the 12 Federal Reserve Banks of the United States responsible for financial supervision and payment systems, is launching a 12-week proof-of-concept central bank digital currency (CBDC) pilot program.
According to the press release shared on November 15th, The Federal Reserve Bank of New York’s Innovation Center (NYIC) is set to participate in the pilot.
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The press release noted that the proof-of-concept pilot program aims to explore the useability of an “interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger” on a regulated network.
During the program, NYIC is set to collaborate with private sector organizations, such as HSBC, BNY Mellon, Mastercard, Citi, TD Bank, Truist, PNC Bank, US Bank, and Wells Fargo. The organizations will use simulated central bank reserves to issue tokens and confirm transactions.
The Director of the New York Innovation Center, Per von Zelowitz, when commenting on the project, noted:
The NYIC looks forward to collaborating with members of the banking community to advance research on asset tokenization and the future of financial market infrastructures in the U.S. as money and banking evolve.
The 12-week project aims to test the “technical feasibility, legal viability, and business applicability of distributed ledger technology.”
It is worth noting that the pilot program will be applied only in a test environment using simulated data. The Federal Reserve Bank of New York highlighted that pilot doesn’t intend to help make any decisions related to policies, issuance of “retail or wholesale CBDC, nor how one would necessarily be designed.”
Earlier this month, The Federal Reserve Bank of New York shared a Financial Stability report, which includes a survey citing potential risks for the US economy. The survey revealed that from January to April 2022, US citizens considered crypto as one of the threats to the US economy. However, the same study conducted from August to October 2022 removed crypto from the list completely.