Federal Reserve Launches Digital Dollar Initiative Days After Leading Cryptocurrency Firm Goes Under

0
63

The Federal Reserve Bank of New York began a simulated digital currency initiative on Tuesday alongside multiple major banks as the cryptocurrency sector descends into chaos.

The digital dollar simulation, which is slated to last for 12 weeks, will “experiment with the concept of a regulated liability network,” a concept for a financial market infrastructure that would facilitate “digital asset transactions that connect deposits held at regulated financial institutions using distributed ledger technology,” according to a press release from the Federal Reserve Bank of New York. Analysts will test the “feasibility of payments between financial institutions” using tokenized assets.

‘They will throw their silver into the streets, And their gold will be like refuse; Their silver and their gold will not be able to deliver them In the day of the wrath of the LORD …” Ezekiel 7:9

 

Among other financial institutions, Citi, Mastercard, BNY Mellon, and Wells Fargo will partake in the simulation, which will determine whether the project is feasible for broader rollout and lead to technical design insights.

The simulation comes as policymakers weigh the merit of a central bank digital currency, which would preserve the international role of the dollar while mitigating pitfalls intrinsic to cryptocurrencies, such as liquidity risk and credit risk, according to a paper from the Federal Reserve. A digital dollar could be privacy-protected, intermediated through digital wallets offered by the private sector, and transferable between customers of different inter

Federal Reserve Chair Jerome Powell said last summer that his “mind is open” to a digital dollar, noting that he was “legitimately undecided” on whether the “benefits outweigh the costs” of central bank digital currencies. “We would want very broad support in society and in Congress,” he told lawmakers. “It’s a very, very important initiative, and I do think we should ideally get authorization.”

The central bank is also testing an instant payment service designed to remove merchants’ need to wait one to three days before payments are finished depositing, as well as the need for workers to wait days before receiving paychecks. Retailers currently pay an average interchange fee of $0.23 when consumers use debit cards, according to data from the Federal Reserve, which the new platform could significantly undercut.

FTX: Customers who trusted crypto giant may be left with nothing | CNN Business

The digital dollar test occurs days after cryptocurrency company FTX suddenly declared bankruptcy following a liquidity crisis, leading to instability among other exchange platforms.

Read More @ Zero Hedge HERE

This site uses Akismet to reduce spam. Learn how your comment data is processed.