Federal Reserve press release The US has announced a 12-week trial of what it calls the Managed Liability Network (RLN). This is CBDC, which is the digital US dollar, although the term itself is only briefly mentioned in the official announcement.
The project was initiated by the New York Innovation Center, which is part of the Federal Reserve Bank of New York. Thanks to distributed ledger technology, it is possible to develop innovations in the financial sector.
The US dollar representation serves as the RLN token. These tokens are issued by banks and serve as a settlement currency for various participants in a single blockchain.
In addition, there is a desire to test “programmable money”. Presumably, this refers to the use of smart contracts. The test is also intended to show if a CBDC should be used under current law.
Prominent financial institutions support the project
The Fed managed to convince a number of well-known financial institutions to take part in the pilot project. These include credit card maker Mastercard and banks HSBC and Citi.
Under money laundering laws, digital dollar users are subject to standard KYC measures. The digital dollar is designed to be interchangeable with each other and with other currencies.
The pilot project revolves around a digital currency that mimics the dollar, but in theory the concept could be ported to other currencies and stablecoins.
Companies SETL and Digital Asset completed the preliminary technological work. They used Amazon Web Services for RLN. The technology, created from a partnership between Swift and Chainlink, is designed to provide the necessary interoperability.
Governments and banks generally support CBDCs, but digital fiat currencies are rejected by the crypto community. Government control threatens the freedom of individual users and will further strengthen banks and governments.
