Testing the digital dollar
The rapid development of the digital assets industry is evolving to respond to the influx of new technologies. The active growth of cryptocurrencies in various areas makes it possible to take a new look at the upcoming global financial system: a new battle is now underway.
How will the digital dollar appear and how can it enter the global financial market? It is possible that the results of a proof-of-concept (PoC) for the creation of a regulated platform for the distribution of digital assets may be based on the results of a proof of concept (PoC).
This article reveals the essence of the system of national digital currencies, about the new American project, aimed at testing the e-dollar and monitoring the upcoming infrastructure of the financial market.
Photo from Freepik
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The traditional principles of penny exchange in the form of fiat currencies and unprepared transactions, as before, are still relevant and are still in practice. The rapid development of digital assets dictates a rethink of the concept of the functioning of financial systems.
One of the “disturbers of peace” is the system of national digital currencies (CBDC), which are being fragmented by centralized financial institutions of various powers.
Almost 100 countries, including Ukraine, are considering the possibility of launching national cryptocurrencies. Countries are already actively testing their CBDCs. One of them is the USA.
On November 15, 2022, representatives of the American banking sector announced the launch of testing to revise the concept of a regulated platform for the distribution of digital assets (RLN) and the possibility of promoting the digital dollar.
What is RLN?
RLN (Regulated Liabilities Network) – a measure of regulated liability. In essence, this technology is based on the same distributed registry and smart contracts with integrated protocol modules for interaction with other financial systems. It is designed to ensure the flow of transactions in different systems and between different systems - both those that are already underway and those that are potentially promising.
According to experts, RLN technology itself can provide the basis for “seamless” interaction between various financial technologies: fiat currencies, cryptocurrencies and CBDC. The rest, in the USA, has not yet been fully activated, but it will certainly be launched and legalized soon.
What do you know about testing the dollar?
During the 12-day test, we will try a version of the RLN scheme that works exclusively in US dollars. The results of the pilot project will be made public upon completion.
The material for carrying out the investigation will not be modeled data. Test participants issued simulated digital tokens that represent customer deposits, and then set up charges for additional simulated reserves to the central bank in Zagalny blockchain. Such tokens are interchangeable and can be exchanged for other forms of currencies.
Testing is being carried out in compliance with the latest regulatory framework and strict rules, including KYC (Know Your Customer) and ways to combat anti-money laundering (AML).
In addition to several large banks, the testing process will include the Mastercard payment system and the international penny transfer system SWIFT. These financial institutions are partners with the New York Innovation Center of the Federal Reserve Bank of New York (NYIC).
Testuvannya = provadzhennya?
Potentially, this concept can be expanded into multi-currency operations and regulation of stablecoins (stable cryptocurrencies). Moreover, the test participants were encouraged to take on the burden of further stages of crypto-dollar distribution.
Already in early 2022, the head of the Fed, Lael Brainard, stated that she would speed up the pace of implementation of this project in order to strengthen the position of the United States in the international financial arena. Apparently, the main competitor of the United States is China, which is actively promoting the digital yuan from the lives of citizens.
At the same time, the organizers of the test say that the project should not be seen as a signal of the Federal Reserve System’s (FRS) readiness for the “debt-language development and release of a sovereign digital currency.”
According to official information, the Federal Reserve is planning to introduce exchanges for sovereign cryptocurrency in the near future, so that the digital dollar will be used only as a payment method, and not for investments. In this way, it is possible to organically combine stablecoins and the formal financial system.
What you need to know about the digital dollar
How about the e-dolar form?
You will lose the dollar issued by the Federal Reserve, as well as all American banknotes and coins that are traded today. І will be accessible to everyone, and not just for financial institutions.
Is it time to launch a digital dollar?
This can reduce and reduce transaction costs. Proponents of the idea argue that it will help people without bank accounts (which is about 5% of US households) and make it easier to pay social security.
How can the emergence of the e-dollar impact the global financial market?
The digital dollar can become a butt of “natural evolution, or not revolution.” Subjects for your exchange of goods: today over 6.5 trillion dollars are exchanged electronically on the foreign exchange market.
Visnovka
The development and promotion of the system of national digital currencies (CBDC) is entirely natural and could potentially lead to innovations both in the private sector and в бізнесі.
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