Monday, February 6, 2023

US Securities Processor Works On Creating CBDC Support Prototype

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The US Securities processor works on creating a CBDC support prototype dubbed “Project Lithium” that will experiment to measure the benefits of a CBDC and guide the design of more cleaning and settlement offering so let’s read more in today’s latest crypto news.

The US Securities processor is exploring central bank digital currencies and a prototype for studying how much the asset can work in reality. The main goal is to examine the real-time transactions via cash-like tokens and how they can pass through the clearing and the settlement process. The Depository Trust and Clearing Corporation the processor that maintains the post-trade market infrastrcuture announced the development in a recent press release and added that it is the first prototype to study CBDC and how they can operate in the US settlement infrastrcuture by leveraging the distributed ledger technology.

The prototype is known as “Project Lithium” and will test if the US market infrastructure can support the FED-issued digital currency for everyday payments. Unlike cryptos like BTC and ETH, a CBDC will be backed by the Federal Reserve and will have the same value as the US dollar. The project will measure the benefits of a CBDC and will inform the future design of the company’s compatibility in managing these payments.


According to the announcement, the main goal is to show a direct settlement of cash tokens between the participants in real-time delivery against payment settlements. The DTCC will also bring out a new pilot program for retail transactions and will learn how they can fit into the American Market Infrastrcuture. The release stated there are plenty of benefits of a CBDC including the reduced counterparty risk and the trapped liquidity that increased capital efficiency and more.

The DTCC is developing a pilot program alongside The Digital Dollar Project which is a nonprofit organization that led discussions on the US CBDC. Christopher Giancarlo as the co-founder said:

“A CBDC could improve time and cost efficiencies, provide broader accessibility to central bank money and payments, and all while emulating the features of physical cash in an increasingly digital world.”

US President Joe Biden signed an order asking the governments to look into the pros and cons of developing a CBDC. It came under concern that if the US stepped behind creating a digital currency, the dollar could lose its position as the world reserve currency. In the meantime, the order encouraged the Federal Reserve to continue the research, development, and US CBDC efforts and asked congress to deliver actionable policies that protect the investors and guide them to responsible innovation.

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