A United States think-tank has unveiled a technical sandbox which intends to advance the exploration of potential United States central bank digital currency (CBDC), as reported by Cointelegraph.
According to Cointelegraph, through a tweet from Digital Dollar Project (DDP), the organisation expressed their desire around exploration of technical and business implementation-based questions revolving around a US CBDC. The organisation emphasised that initial members of the sandbox include cryptocurrency firm Ripple, financial technology company Digital Asset, software platform Knox Networks, and banking solutions firm EMTECH. The program around technical sandbox intends to give the federal government, policymakers and the private sector an understanding of how a potential CBDC would be unveiled, which includes potential implications to retail, wholesale and international use cases such as cross-border payments.
On the basis of information by Cointelegraph, the US Federal Reserve is yet to take a call on whether or not it should be implementing a CBDC, along with exploring potential risks and benefits that can come with it. The central bank released a discussion paper around the pros and cons of CBDCs but didn’t provide any insights around its future plans. The paper suggested that CBDCs can be used as digital money free from credit and liquidity risks, improve cross-border payments help with US dollar’s preservation, ensure financial inclusion and extend public access to central bank money.
Moreover, Cointelegraph noted that potential risks resulted in a changed US financial system, bank runs for other forms of money, reduction in the power for monetary policy, operational resillience and balance between transparency and safegurading consumer privacy rights. The technical sandbox program is expected to start this year in two separate phases, including an educational phase and a pilot phase. The Digital Dollar Project (DDP) aims to encourage research and discussion around a US CBDC and released a white paper proposing a tokenised US digital dollar in May, 2020.
(With insights from Cointelegraph)
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