The project will test the feasibility of a programmable digital money design, as well as the viability of the proposed system within existing laws and regulations
The New York Innovation Center (NYIC), an initiative by the NY Federal Reserve, along with 9 major US banks are starting the 12-week project to test digital dollar settlement on the interoperable digital money platform known as the Regulated Liability Network (RLN).
The proof-of-concept project will build a prototype for a distributed ledger-based network and test tokenized payments between financial institutions. To put it simply, commercial banks will issue simulated digital money – “tokens” representing customers’ deposits. Then they will settle tokenized transactions through simulated central bank reserves on a shared platform.
The participants include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo. Besides, the global financial messaging service provider Swift will be supporting interoperability across the international financial ecosystem. Meanwhile, the technology will be provided by SETL and Digital Asset and powered by Amazon Web Services.