Leading global banks kicked off a 12-week pilot together with the New York Federal Reserve.
The project was first reported by The Block.
The so-called regulated liability network will serve as a ground for participants to experiment with wholesale digital asset transaction and settlements. The project will only use simulated data, the New York Fed said.
"This theoretical [financial market infrastructure] provides a multi-asset, always-on, programmable infrastructure containing digital representations of central bank, commercial bank, and regulated non-bank issuer liabilities, denominated in U.S. dollars," the statement said.
The USDF Consortium, a trade group promoting the use of tokenized deposits and transactions by banks, praised the project.
"Tokenizing deposits and other regulated liabilities can bring blockchain innovation into the real economy while maintaining the numerous protections afforded by banking regulation and ensuring that banks can continue to provide access to credit," the group's CEO, Rob Morgan, said in a statement. "This can help lower the cost of payments, ensuring that consumers have real time access to their funds. It can also create efficiencies that can lower the cost of credit and expand access."
Partners on the digital dollar pilot as part of the New York Fed’s innovation center include BNY Mellon, Citigroup, HSB Holdings, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo & Co.
The international payment system, SWIFT, will provide an interoperable infrastructure. Deloitte will provide advisory services, and Sullivan & Cromwell LL will provide legal advice.
In addition to the announcement of the regulated liability network today, the New York Fed also has an ongoing cross-border digital dollar project.
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