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Global financial services giants such as Mastercard, Citigroup and others are joining hands with the Federal Reserve Bank of New York to launch a 12-week pilot for a digital dollar system.
The pilot, called the “Regulated Liability Network,” will be conducted in a test environment using simulated data, Reuters informed of, In addition to Mastercard and Citigroup, major global banks HSBC and Wells Fargo are also involved in the pilot project.
The pilot aims to test whether banks can speed up payments using a tokenized version of the dollar in a common database. The project thus differs from traditional cryptocurrencies in that it does not rely on a single database, but on a distributed ledger.
A digital dollar is a form of central bank digital currency or cbdc for the little one.
Opinions differ between the US government and the Federal Reserve on whether a CBDC is a good idea, with one US senator going as far as Suggest banning CBDC,
Similarly, many in the traditional banking industry are also opposed to the digital dollar. According to the American Bankers Association, The benefits of CBDCs are “uncertain and is unlikely to be realised,” with the risk of undermining the banks’ business models.
“A US CBDC is not necessary to digitize the dollar, as the dollar is largely digital today,” the bankers added in a letter to the Federal Reserve at the time.
Others, however, have a more positive outlook. Among them is Michel Neal, head of the New York Fed’s markets group, who said earlier this month that his team sees promise in using CBDCs to speed up settlement times.
The subject of CBDC, in particular, was mentioned in the President Joe Biden’s Executive Order on Crypto Since March this year. In this, the President said that the US should formally consider developing its own CBDC.