Claim Giveaway Token Proof of Reserve

Top CBDC News: Think Tank Launches ‘Technical Sandbox’ Exploring United States CBDCs

02-Sep-2022 By: Divya Behl
Top CBDC News: Think

A United States research group has launched a "technical sandbox" 

To advance the development of a prospective US central bank digital currency (CBDC).

In a Wednesday tweet, Digital Dollar Project (DDP) stated that the new initiative will investigate technical and commercial implementation challenges around a CBDC in the United States.

The organization stated that the sandbox's inaugural members include crypto-firm Ripple, financial technology company Digital Asset, software platform Knox Networks, and banking solutions provider EMTECH.

The Technical Sandbox Program intends to provide the federal government, lawmakers, and the corporate sector with a better understanding of how a future CBDC might be implemented. This includes the possible consequences for retail and wholesale, as well as international use cases like cross-border payments.

The US Federal Reserve has yet to determine whether or not to implement a CBDC, although it has been examining the potential risks and advantages. On January 20, it released a discussion paper assessing the benefits and drawbacks of CBDCs but made no mention of its future plans.

The paper proposed that CBDCs may function as digital money free of credit and liquidity issues, facilitate cross-border payments, help in the preservation of the US dollar's supremacy, promote financial inclusion, and offer the public access to secure central bank money.

Potential risks discovered would include an altered US financial system, more severe bank runs for other kinds of money, a reduction in monetary policy's authority, operational resilience, and a difficult balance between transparency and protecting consumer privacy rights.

Meanwhile, China's CBDC, the digital yuan, is rapidly spreading across the country, while the eNaira is doing the same in Nigeria. The Bahamas and the Eastern Caribbean Currency Union have already introduced CBDCs, while Russia plans to launch its own in 2024.

According to a press release issued on Monday, the FedNow service, a rapid payment service expected to launch in mid-2023, will begin "technical testing" in September. FedNow is viewed as a first step in establishing a CBDC.

On Wednesday, Davis Wright Tremaine LLP partner Alexandra Steinberg Barrage, a former FDIC policy specialist, tweeted her support for the initiative. Regardless of your feelings on a CBDC in the United States, Barrage believes that pilot projects and statistics are crucial when evaluating new technology.

The Technical Sandbox Program is slated to begin in October, with early participants focusing on cross-border payments. The program is scheduled to be released in two phases: an instructional phase and a pilot phase.

During the educational phase, providers and participants will attempt to comprehend the technology from both a functional and a business standpoint. While in the pilot phase, the focus will be on discovering and evaluating specific applications for CBDCs.

The Digital Dollar Project is a collaboration between the non-profit Digital Dollar Foundation and the IT consulting business Accenture. In May 2020, DDP launched a white paper suggesting a tokenized US digital dollar in order to spur research and discussion around a CBDC in the United States.

Read also: Celsius Seeks to Resume Withdrawals for Limited Number of Customers

Related News
Related Blogs