NY Fed Says Months-Long Test on Digital Dollar Shows Speed Advantage
- A division of NY Fed concludes digital-dollar test with banks
- Test was ‘conducive’ to further exploring tokenized deposits
This article is for subscribers only.
A monthslong test with some of the world’s largest banks found that digital dollars could be an effective way to improve domestic and cross-border payments, according to a unit of the Federal Reserve Bank of New York.
The Fed’s New York Innovation Center spent 12 weeks testing a technology known as a regulated liability network, which allows banks to simulate issuing digital money representing their customers’ own funds before settling through central bank reserves on a distributed ledger. The test proved to the Fed that these so-called digital dollars have the ability to improve wholesale payments, and that the use of the ledger didn’t alter the legal treatment of the deposits.