PaymentsJournal
SUBSCRIBE
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
  • Analysts Coverage
  • Truth In Data
  • Podcasts
  • Videos
  • Industry Opinions
  • News
  • Resources
No Result
View All Result
PaymentsJournal
No Result
View All Result

NY Fed’s Pilot Signals Benefits to a Digital Dollar

Josh Einis by Josh Einis
July 13, 2023
in Analysts Coverage, Digital Currency
0
digital dollar back-office operations

Business people holding tablet and graph chart statics growing in e-commerce global market and icon customer network connection on virtual interface. Arrow graph corporate future growth plan. Digital Online Marketing. Business ecommerce technology.

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

A division of the Federal Reserve Bank of New York has concluded a monthslong test on the viability of a digital dollar, according to Bloomberg. The experiment, carried out at the Fed’s New York Innovation Center, focused on a technology called a regulated liability network, which allows banks to issue digital money representing their customers’ funds. The Fed concluded that digital dollars could significantly improve wholesale payments—in particular— cross-border payments.

“The high-level news from the New York Fed’s pilot is that a digital currency has real applications and is technically and legally possible,” said James Wester, Head of Cryptocurrency at Javelin Strategy & Research. “That won’t be a surprise to anyone who has paid attention to the digital asset space for any length of time.”

Currently, the process of sending money overseas can be slow and cumbersome due to the diverse systems used by banks and governments worldwide. The use of digital dollars on a shared ledger has the potential to revolutionize this process by synchronizing dollar-denominated payments and enabling near-real-time settlement.

With the increasing shift to digital, the financial industry has been exploring ways to leverage technology to improve payment systems. The rise of cryptocurrencies and blockchain technology has sparked innovation, with many financial institutions and technology companies exploring the potential of digital currencies. The NY Fed’s experiment adds to this growing body of research and demonstrates that regulated digital currencies, such as digital dollars, can offer tangible benefits in terms of speed, efficiency, and security.

It’s worth noting that the test was conducted on a private blockchain, requiring permission to participate, rather than using public blockchains associated with cryptocurrencies. This choice reflects the cautious approach of central banks and financial institutions, who are prioritizing regulatory compliance and privacy in their digital currency experiments.

Despite the positive findings of the test, the NY Fed emphasized that it does not indicate an imminent decision to issue a central bank digital currency (CBDC). The experiment was a proof of concept to evaluate the feasibility and benefits of digital dollars, rather than a policy announcement.

“While there are differences in technical terms across different shared ledger approaches, that overarching message coming from the New York Fed’s pilot—that a shared ledger visible to all participants can yield improvements to payment use cases—is what the crypto space has been arguing for the better part of a decade,” Wester said. “This pilot is simply a further validation of that idea. Whether or not this technology should be used to deliver a central bank digital currency is now a political question.”

Tags: CBDCCentral Bank Digital CurrencyDigital CurrencyDigital PaymentsThe Federal Reserve
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

    Analyst Coverage, Payments Data, and News Delivered Daily

    Sign up for the PaymentsJournal Newsletter to get exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    digital payments

    Mass A2A Payment Adoption in The U.S. Contingent on Compelling USP

    September 25, 2023
    cashless payments mobile

    The Synergy Between Cashless Payments and Seamless Mobile Coverage

    September 22, 2023
    The Power of AI and How its Transforming the Financial Landscape

    The Power of AI and How It’s Transforming the Financial Landscape

    September 21, 2023
    “You’re a Fintech, I’m a Legacy Bank – How Can We Collaborate?”

    Investing in Fintech: Opportunities and Challenges in the Payments Industry

    September 20, 2023
    real-time payments across the globe

    In 2023, Real-Time Payments Expanding Across the Globe

    September 19, 2023
    AI

    AI in EBPP: Small Changes, Huge Impacts

    September 18, 2023
    Amazon

    How Tech Is Changing the Checkout Process

    September 15, 2023
    fraud risk models

    Consortium Approach Dramatically Improves Fraud Risk Models

    September 14, 2023

    Linkedin-in Twitter

    Advertise With Us | About Us | Terms of Use | Privacy Policy | Subscribe
    ©2023 PaymentsJournal.com

    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    Menu
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Videos
    • Industry Opinions
    • Recent News
    • Resources
    Menu
    • Industry Opinions
    • Recent News
    • Resources
    • Analysts Coverage
    • Truth In Data
    • Podcasts
    • Industry Opinions
    • Faster Payments
    • News
    • Jobs
    • Events
    No Result
    View All Result