- The Federal Reserve Bank of New York has successfully completed an experiment focused on the use of a digital dollar.
- The experiment reduced clearing and settlement from the current two-day average to less than 15 seconds.
- Several countries have joined the initiative to manage to use of this payment system in real time.
- The president of the Fed, Jerome Powell, spoke out against the project and considers that at this time this is not a definitive solution.
The Federal Reserve Bank of New York has an office that has successfully completed testing a central bank digital currency. This will be used for wholesale cross-border transactions, managing to exchange a US digital dollar with foreign currencies on different blockchains.
The name of the project is Project Cedar, its first phase focused on the potential of central bank digital currencies to become viable options for large foreign exchange transactions. However, Jerome Powell, Chairman of the Fed, along with other members of the board, has stated that the creation of a digital dollar is not a viable solution.
The pilot test managed to reduce the average clearing and settlement of two-day transactions to less than 15 seconds, achieving an impressive level of transaction completion. This managed to eliminate the risk that complicated cross-border operations are only partially carried out.
This process has already been implemented by several countries that have managed to use the real-time payment system without blockchains, but these usually only work with a single currency. On the other hand, the Fed has already managed to test cleared payments at an almost instantaneous speed between a digitized dollar and eight experimental coins that managed to work on different blockchains.
Even so with the positive result that the experiment provided, the New York Federal Reserve has made it clear that this experiment is not a definitive conclusion. However, the group in charge of the project affirmed the potential of a US central bank digital currency to improve large-scale cross-border payments.
“Phase I of Project Cedar revealed promising applications of blockchain technology in modernizing critical payment infrastructure, and our inaugural experiment provides a strategic launch pad for further research and development related to the future of money and payments. payments from the perspective of the United States”.
said Per von Zelowitz, director of the research center that ran the experiment within the New York Fed.
