Global financial giants such as Citigroup, HSBC, and Bank of New York Mellon (BNY Mellon) are using a shared ledger to make 24-hour wholesale payments called a regulated liability network. regulated liability network)”. A paper published Wednesday showed the system has potential.
New York Fed also participates
The project is in the middle of the debate between Central Bank Digital Currencies (CBDC) and private stablecoins. The New York Innovation Center (NYIC) at the Federal Reserve Bank of New York, which has been collaborating on the project since last year, says it has the ability to “synchronize US dollar-denominated payments and facilitate near-real-time payments 24/7.” Therefore, the network has the potential to improve the processing of wholesale payments.”
NYIC director Per von Zelowitz said in a statement: “From a central bank perspective, this proof of concept explores tokenized regulated deposits and a shared ledger. It has helped us understand the potential functional benefits of digital money for central banks and commercial banks operating in tandem.” The NYIC says it does not endorse the project and that its actions do not reflect any position of the Federal Reserve.
Experiments such as trading of deposit tokens of commercial banks
The network experimented with transactions of commercial bank deposit tokens on the same platform and using a shared ledger to settle in a hypothetical wholesale CBDC. We also explored cross-border US dollar wholesale movements. The network solves some of the challenges around payment “speed, cost, availability after hours, and the payment process,” according to a proof-of-concept released Wednesday by the group that conducted the experiment.
Mastercard, PNC Bank, a major U.S. bank, SWIFT that supports international payments between banks, Toronto-Dominion Bank (TD), Truist, US Bank, U.S. Silver giant Wells Fargo was also on board, but nothing has been agreed on next steps in the experiment, he said.
Raj Dhamodharan, Executive Vice President of Mastercard, said on Twitter of the project, “How shared ledger technology and the regulated financial system work together to create a dynamic, secure and efficient financial system. It is an important exploration of whether we can provide flexible payment solutions.”
On the other hand, the Federal Reserve Board (FRB) is about to launch a real-time payment system “FedNow” in the United States to enable immediate settlement of bank customer transactions that currently take several days.
｜Editing: Rinan Hayashi
| Image: David Merrett/Flickr
｜Original: Big Banks, NY Fed’s Innovation Group See Merit in Digital Ledgers for Global Payments