The Digital Dollar Project’s Technical Sandbox Program is set to begin
in October, aiming to provide a clearer understanding of the
ramifications of a United States CBDC.
A United States think tank has launched a “technical sandbox” aimed at advancing the exploration of a potential United States central bank digital currency (CBDC).
In a Wednesday Tweet from Digital Dollar Project (DDP), the organization said the new program would explore “technical and business implementation” questions revolving around a U.S. CBDC.
The
organization noted that the initial participants of the sandbox include
crypto-firm Ripple, financial technology company Digital Asset,
software platform Knox Networks and banking solutions firm EMTECH.
The
Technical Sandbox Program aims to give the federal government,
policymakers and the private sector a clearer understanding of how a
potential CBDC would be rolled-out.
This includes the potential implications to retail and wholesale and international use cases such as cross-border payments.
The
U.S Federal Reserve has yet to decide whether or not it will implement a
CBDC but has been exploring the potential risks and benefits that come
with them.
On Jan. 20, it released a discussion paper examining the pros and cons of CBDCs but neglected to give any hints about its future plans.
The
paper suggested that CBDCs could act as digital money free from credit
and liquidity risks, improve cross-border payments, help preserve the
dominance of the U.S dollar, promote financial inclusion and extend
public access to safe central bank money.
Potential risks found
included a changed U.S financial system, more severe bank runs for other
forms of money, reducing the power of monetary policy, operational
resilience and a difficult balance between transparency and safeguarding
consumer privacy rights.
Meanwhile, China’s own CBDC, the digital yuan, is quickly being rolled out across the country, while the same is occurring in Nigeria
with the eNaira. The Bahamas and countries of the Eastern Caribbean
Currency Union have also launched CBDCs, while Russia is set to roll out its own in 2024.
The FedNow service, an instant payment service set to be launched in mid-2023, aims to begin “technical testing” in September, according to a Monday press release. FedNow is seen as a step toward an eventual CBDC.
Davis
Wright Tremaine LLP partner Alexandra Steinberg Barrage, a former FDIC
policy expert, tweeted her support for the program on Wednesday. Barrage
suggested that regardless of what your views are on a U.S. CBDC, pilot
programs and data are essential when evaluating new tech.
The Technical Sandbox Program is set to begin in October with
cross-border payments being the initial focus for the early
participants.
The program is set to be released in two separate phases, including an educational phase and a pilot phase.
During
the educational phase, providers and participants will seek to
understand the technology from both a functional and business
perspective. While in the pilot phase, the focus will be on identifying
and testing specific ways in which CBDCs can be utilized.
Related: Fed and MIT's CBDC research: Distributed ledger tech has ‘downsides’
The
Digital Dollar Project is a partnership between the not-for-profit
organization Digital Dollar Foundation and IT consulting firm Accenture.
DDP seeks to encourage research and discussion around a U.S. CBDC and released a white paper proposing a tokenized U.S. digital dollar in May 2020.
source link : https://cointelegraph.com/news/think-tank-launches-technical-sandbox-exploring-united-states-cbdcs
