U.S. Banks Ready to Test Digital Dollar

Even though the cryptocurrency sector has been shaken to its core by the collapse of FTX, traditional financial institutions in the United States are taking the initial steps toward studying digital currencies. The New York Innovation Centre (NYIC) unveiled plans for 12-week Proof of Concept trials of a central bank digital currency (CBDC). According to an official news release, the experiment would test the viability of an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger on a regulated liability network. Established financial organizations such as BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, U.S. Bank, and Wells Fargo will be entrusted with creating tokens and settling transactions using virtual central bank reserves as part of the trial.

According to the Federal Reserve Bank of New York, the initiative's scope might potentially extend to include multi-currency operations and regulated stablecoins. Financial regulators have long been intrigued by the prospect of central bank digital currencies. CBDCs, like stablecoins, are digital representations of a state's paper currency that are linked at a 1:1 ratio to the fiat currency in question. Michelle Neal, Executive Vice President and Head of the Markets Group at the Federal Reserve Bank of New York, has voiced confidence that a central bank digital dollar might be critical to shortening currency settlement periods.

Sources:

https://dailycoin.com/u-s-banks-to-test-feasibility-of-digital-dollar-with-ny-fed/

https://www.washingtonexaminer.com/policy/economy/fed-banks-digital-dollar-test

https://cointelegraph.com/news/ny-fed-launches-12-week-cbdc-pilot-program-with-major-banks

https://decrypt.co/114761/us-banks-launch-digital-dollar-blockchain-platform-pilot