The U.S. Digital Dollar Project (DDP) has announced plans to create a technical sandbox where members and financial services providers can experiment with a U.S. central bank digital currency (CBDC) that its organizers hope the government will eventually issue.
While more than 100 countries are either studying, experimenting with or piloting CBDCs, the U.S. has shown only modest interest in the creation of a digital dollar, and any potential launch is five to 10 years off.
Read more: Digital Dollar Project’s Sandbox to Study CBDC X-Border Payments
That said, there is a great deal of interest in CBDCs — including in Congress — as they could offer several benefits, ranging from real-time payments to increased financial participation by the unbanked and underbanked. They could also help support and defend the dollar’s role as the world’s reserve currency. However, many banks fear it could implode their core business model of loaning out depositors’ funds.
See also: Digital Dollar Debate Shifts as Central Banks Embrace CBDCs
The DDP’s sandbox will not be a regulator-sponsored one in which companies can launch public products and services. That said, the DDP was formed by former Commodity Futures Trading Commission (CFTC) chairman Chris Giancarlo shortly after he stepped down in 2019.
“The launch of our Technical Sandbox Program marks the next step in our effort to convene the private and public sector in exploration of a central bank digital currency in the U.S.,” Jennifer Lassiter, executive director of the DDP, said in a press release. “We understand how important it is to include a diverse set of views and expertise as we look to answer key questions about how the technology could work, the problems we hope to solve, and the ultimate business and individual outcomes we want to achieve.”
Lassiter noted that the DDP hopes the sandbox will “lay the foundation for robust pilots that improve the outcomes and usability of CBDCs.”
The sandbox participants will “examine real-world technology, explore potential implications to business strategies and operations, and experiment to uncover possible use-case specific solutions,” according to the release.
IMF Calls for Cross-Border Platform
The International Monetary Fund (IMF) is pushing for a global platform for cross-border payments, as well as greater crypto regulation.
Related: IMF Staffers Favor Platform for X-Border Payments, Crypto Regulation
These calls to action were published in the September issue of the IMF’s quarterly Finance & Development magazine, according to a Sept. 1 report by CoinDesk.
The report noted that Tobias Adrian, financial counselor and director of the monetary and capital markets department at IMF, has called for the creation of an international platform that would accept CBDC payments and issue tokens to reduce the cost of international transfers.
Additionally, Agustín Carstens, general manager at the Bank for International Settlements (BIS), wrote in a recent article that, “Any legitimate transaction that can be carried out with crypto can be accomplished better with central bank money. Crypto is neither stable nor efficient … its participants are not accountable to society. Frequent fraud, theft and scams have raised serious concerns about market integrity.”
India Aims for Pilot
The Reserve Bank of India (RBI) is reportedly talking with four state-run banks and several FinTechs about piloting a digital rupee, according to Indian financial publication MoneyControl. An official told the publication off the record that the banks include the State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda.
India’s government has set aggressive timelines to launch a CBDC, while also banning any use of cryptocurrencies in making payments. Pilot launches for both retail and wholesale CBDCs are aimed at 2022 and 2023.
The article added that FIS, a U.S. financial services technology provider, is also involved with the project. The company recently announced that it is launching a CBDC Virtual Lab that is intended to give central and commercial bankers, and executives from other financial institutions, the opportunity “to experiment with — and pilot — core concepts of issuance, transfer, redemption, offline payments, programmable payments, retail, wholesale and cross-border payments.”
Learn more: FIS Intros Infrastructure Solution for Global Real-Time Payments, CBDCs
It added that the FIS CBDC Virtual Lab has “enterprise-grade technology that supports over one million transactions per second at less than a second latency.”
China Tops Up
China has announced that consumers with digital yuan wallets can now link them to their bank accounts, automatically topping it up when funds start to run low or they want to buy something that would otherwise require a manual top-up, according to Shanghai-based business news outlet Yicai Global.
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