The Federal Reserve Bank of New York has successfully concluded an experiment centered on deploying a digital dollar for complex currency exchange operations that span multiple blockchains. The experiment sped clearance and settlement from the usual two days to under 15 seconds.
What's the trial on?
An office of the Federal Reserve Bank of New York (1) has successfully tested a central bank digital currency for large-scale, international trades by exchanging a digital dollar representing the United States for test currencies on several blockchains. Although Federal Reserve Chair Jerome Powell and other board members of the U.S. central bank have made it clear that the creation of a digital dollar is not a foregone conclusion, Project Cedar: Phase One concentrated on the potential for central bank digital currencies to become viable options for significant foreign currency transactions.
What were the results?
The pilot completed the transaction atana "atomic" level, removing the possibility that sophisticated cross-border deals would only partially go through, and beat the typical clearing and settlement of transactions from two days to under 15 seconds. Numerous nations currently use real-time, non-blockchain payment systems, although they frequently use a single currency.
Is this experiment foolproof?
The New York Fed experimented with clearing payments at almost real-time speeds between a digital dollar and eight test currencies operating on different blockchains. Despite the experiment's favorable results, the New York Fed article that published them made it clear that the results were not final. Nevertheless, the project's backers praised the possibility of a digital currency issued by the American central bank (CBDC) for use in large-scale international transactions.
Per von Zelowitz, the director of the research center that oversaw the experiment within Project Cedar, said that Project Cedar Phase I revealed promising applications of blockchain technology in modernizing critical payments infrastructure, and our inaugural experiment provides a strategic launch pad for further research and development regarding the future of money and payments from a U.S. perspective. (2)