Mastercard, HSBC and Wells Fargo, among others in a group of bank giants in the US, have launched a digital dollar blockchain project amid the ongoing slump in the shaken crypto market. The name of the initiative is ‘Regulated Liability Network (RLN)’. This proof-of-concept platform is expected to develop improvement solutions for financial settlements using the blockchain technology. The launch of RLN is essentially a trial that will run for twelve weeks and singularly operate in co-relation with the US dollar.
The New York Innovation Center (NYIC), which is part of the Federal Reserve Bank of New York, will also be part of this initiative in order to understand ways to stimulate digital money issued by the regulated institutions.
“The RLN design that operates exclusively in US 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,” said an official statement on the development.
The trial programme is also expected to test the practicality of a programmable digital money design that is potentially extensible to other digital assets within existing laws and regulations.
“The PoC will simulate tokens that are 100 percent fungible and redeemable with other forms of money. It will include dialogue with the broader US banking community, including community and regional banks. Following the conclusion of the PoC, the banking group will publicise the results,” the release added.
The US is among several other nations that are structuring the initial designs of CBDCs or Central Bank Digital Currencies.
A CBDC is a blockchain-based payments solution that is regulated and controlled by the central banks. At present, India, Jamaica, and China are among several nations that are working on their respective CBDCs.
This result of this trial is expected to become an important contribution to the literature on digital money.
Edward Snowden, the former employee of US’ National Security Agency (NSA), has welcomed the decision on Twitter.
BNY Mellon, Citi, PNC Bank, Swift, TD Bank, Truist, and the US Bank are also expected to be part of the project.