group of financial institutions, such as HBSC, Mastercard, and Wells Fargo, announced the release of the Regulated Liability Network on Tuesday (RLN).
"Members of the United States banking and payments community involved in this proof-of-concept are delighted to be working alongside the New York Innovation Center (NYIC), which is part of the Federal Reserve Bank of New York," the group said in a statement.
The platform, according to the group, will use a distributed ledger, also known as the blockchain, to start creating opportunities to enhance financial settlements. It would also include central banks, financial institutions, and regulated non-banks such as BNY Mellon, Citi, PNC Bank, Swift, TD Bank, Truist, and the United States. Bank.
Exiled whistleblower Edward Snowden simply tweeted, "It begins," in response to the announcement.
Banking officials have long been intrigued by the potential of central bank digital currencies or CBDCs. CBDCs are digital versions of a state's fiat currency that, like stablecoins, are pegged to a specific fiat currency in a 1:1 ratio.
According to the organization, the RLN will run for twelve weeks and will only accept US dollars. On a shared blockchain, attendees will issue simulation model digital tokens chosen to represent customer deposits and resolve through simulated central bank reserves.
The project will include a regulatory framework that is consistent with existing regulations such as know your customer (KYC) and anti-money laundering requirements. They will also investigate the viability of expanding the platform that supports additional digital assets such as stablecoins.
Following the completion of the project, the group says it will publicize the results of the pilot program, but participants are not forced to attend in future initiatives.
The US would not be the first to try to create a national digital currency. China has already started developing a digital yuen. In September, Australia launched a pilot project for a digital dollar based on Quorum, an enterprise-grade, private variant of Ethereum.
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