Among a group of bank giants in the US, Mastercard, HSBC, and Wells Fargo have launched a digital dollar blockchain project amid the ongoing slump in the shaken crypto market. The initiative is named ‘The regulated Liability Network (RLN).’ This proof-of-concept is expected to improve financial settlement solutions using blockchain technology. The launch of the Regulated Liability Network is a trial that will continue for 12 weeks and operate in correlation with the US dollar.
Being a part of the Federal Reserve Bank of New York, the New York Innovation Center (NYIC) will also be part of this initiative to understand ways to stimulate digital money issued by regulated institutions.
As stated by the developmental team, the RLN design operates exclusively in US dollars, where commercial banks issue simulated digital money or ‘tokens’ representing their customers’ deposits. The amount will be settled through simulated central bank reserves on a shared multi-entity distributed ledger.
The trial program is expected to test the program practically by the digital money design that is potentially extensible to other digital assets within existing laws and regulations.
As per the release, the PoC will simulate tokens that are 100 % fungible and redeemable with other forms of money. PoC is inclusive of dialogue with the broader US banking community, such as community and regional banks. The banking group will publicize the results.
Among several other nations, the US is structuring the initial designs of CBDCs or Central Bank Digital Currencies.
A CBDC is a blockchain-based payment solution regulated and controlled by central banks. In the current scenario, India, Jamaica, and China are among several nations working on their respective CBDCs.
The result is expected to be an essential contribution to the literature on digital money.
Edward Snowden, the former US National Security Agency (NSA) employee, has welcomed the decision on the tech giant- Twitter.
It is expected that BNY Mellon, Citi, PNC Bank, Swift, TD Bank, and Truist are also going to be a part of the project.