The Federal Reserve Bank of New York is partnering with the Bank for International Settlements (BIS) Innovation Center to test government stablecoins to improve foreign exchange transactions.
This study was conducted as part of the Cedar project organized by BIS to test wholesale CBDCs in international transactions. Director of the New York Innovation Center (NYIC) Per von Zelowitz noted that thanks to the blockchain, payments using foreign currencies can be made within 10 seconds. In addition to accelerated transactions, the blockchain makes it possible to make them around the clock.
At the first stage of the Cedar project, it became clear that the blockchain can significantly modernize the payment infrastructure, so the participants in the experiment will continue strategic research and development. Zelovets noted that at the current stage, issues related to privacy, scalability and programmability of digital currencies of central banks were not considered. However, special attention will be paid to these tasks in the further phases of testing.
BIS is conducting several experiments on the use of distributed ledger technology (DLT) and government cryptocurrencies in cross-border settlements. In September, BIS completed the MBridge project involving the central banks of China, Thailand, Hong Kong, the United Arab Emirates (UAE) and commercial banks. According to a May BIS survey , about 90% of central banks are exploring the possibility of launching their own digital currencies.
