Ten members of the banking community are working with the New York Innovation Center (NYIC), which is part of the Federal Reserve Bank of New York, to explore the feasibility of the regulated liability network (RLN) — an interoperable digital money platform.
The proposed RLN would use distributed ledger technology to improve financial settlements and would include central banks, commercial banks and regulated non-banks, the participating firms said Tuesday (Nov. 15) in a press release.
“The 12-week PoC [proof of concept] will test a version of the RLN design that operates exclusively in U.S. dollars where commercial banks issue simulated digital money or ‘tokens’ — representing the deposits of their own customers — and settle through simulated central bank reserves on a shared multi-entity distributed ledger,” the release said. “The PoC will also test the feasibility of a programmable digital money design that is potentially extensible to other digital assets, as well as the viability of the proposed system within existing laws and regulations.”
The project will be conducted in a test environment, will use only simulated data and will release its findings after the test is concluded, according to the press release.
“It is not intended to advance any specific policy outcome, nor is it intended to signal that the Federal Reserve will make any imminent decisions about the appropriateness of issuing a retail or wholesale CBDC [central bank digital currency], nor how one would necessarily be designed,” the release said.
The firms participating in the project include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, Swift, TD Bank, Truist, U.S. Bank and Wells Fargo, per the release.
In related news, a New York Fed official said Nov. 4 that one of the most significant benefits of a United States CBDC could be faster cross-border transactions.
Michelle Neal, executive vice president and head of markets at the Federal Reserve Bank of New York, cited research that is underway at the NYIC in a project dubbed Project Cedar.
FAQs
The firms participating in the project include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, Swift, TD Bank, Truist, U.S. Bank and Wells Fargo, per the release.
Which US banks are testing digital currency? ›
The pilot will be conducted in a test environment and will use a technology provided by SETL and Digital Asset. The list of participants in the pilot program includes BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo.
Is the US Bank going digital currency? ›
Is the US Going to Digital Dollar? As of June 2024, the US Federal Reserve has not decided to transition to a CBDC or supplement its existing monetary system with one. It is researching the effects a CBDC would have on the dollar, the US, and the global economy.
Which bank is going digital? ›
The bank will remove its cash and cheque deposit services at its offices and is moving solely to digital banking.
What is the US government digital dollar? ›
Understanding the digital dollar
The money would be directly issued by the Federal Reserve and live on a digital ledger, such as a blockchain, meaning there wouldn't be a need for traditional banks to handle certain types of transactions or recordkeeping.
Will digital currency replace cash? ›
This type of money is known as a central bank digital currency (CBDC). It would not replace cash.
What happens if the US dollar goes digital? ›
The concern is that financial privacy will be lost with a digital dollar. The government would be able to watch how people spend their money, close their bank accounts, or even just take the money. In other words, the worry is that a digital dollar would be one more way for the government to control us and our money.
Are credit unions going to digital currency? ›
Credit unions oppose CBDC
A recent letter noted that the organization “is concerned that the costly trade-offs are very likely to exceed hypothesized benefits of a CBDC,” presumably referring to the impact of a digital dollar on the banking and credit union sectors.
What bill banning digital currency? ›
This Act may be cited as the “CBDC Anti-Surveillance State Act”. SEC. 2. Prohibition on Federal reserve banks relating to certain products or services for individuals and prohibition on directly issuing a central bank digital currency.
Is Bank of America going digital currency? ›
Central bank digital currencies (CBDCs) are coming, but a digital dollar is unlikely in the near term, Bank of America (BAC) said in a report on Monday.
The fear of transmission coupled with lockdowns and other restrictions led to a boom in online shopping and cashless payments globally. As consumers continue to embrace the legacy of the pandemic and a surge in finance technologies, cash payments are expected to continue to decline in the coming years.
Which bank is stopping cash? ›
Macquarie Bank customers will be stopped from withdrawing and depositing cash or cheques at its branches around the country from this month.
Why are banks moving to digital? ›
1. Improved Customer Experience and Satisfaction: Digital channels offer the convenience and efficiency that customers crave. 2. Enhanced Operational Efficiency and Cost Reduction: Digitization reduces the reliance on physical branches, resulting in significant cost savings.
What will replace the US dollar? ›
Instead of replacing US dollars with the currencies of the world's largest economies, like China's renminbi and the EU's euro, central bankers are holding more currencies from smaller economies with a strong credit rating. These include the Australian dollar, the Canadian dollar, and the South Korean won.
Will cash become obsolete? ›
From paper to polymer banknotes
We have been issuing banknotes for over 300 years and make sure the banknotes we all use are of high quality. While the future demand for cash is uncertain, it is unlikely that cash will die out any time soon.
What banks will use digital currency? ›
Participating banks include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo.
Is Wells Fargo going to digital currency? ›
Wells Fargo Says an American CBDC Could Be Designed, Approved and Launched in Three to Five Years.
Which Bank has digital currency? ›
CBDC – Digital Rupee (e₹) is a digital form of fiat currency, issued and regulated by the RBI. In this case, Union Bank of India is at the forefront of embracing this cutting-edge digital currency technology.
Which banks are selected for CBDC? ›
These include the State Bank of India, the ICICI Bank, the Yes Bank and the IDFC First Bank, the Bank of Baroda, the Union Bank of India, the HDFC Bank and the Kotak Mahindra Bank.
