Industry owned and governed, The Depository Trust & Clearing Corporation (DTCC) has announced the development of a prototype project named “Project Lithium” to explore the operations of CBDC and its benefits in the US markets.
This is the first prototype project developed regarding CBDC. It will observe how the Federal Reserve issued and backed currency might fare in the U.S clearing and settlement infrastructure leveraging distributed ledger technology (DLT).
The project will explore how CBDC could enable atomic settlements, a conditional settlement that occurs if delivery and payment are both received at the same time.
The project also aims to demonstrate the direct, bilateral settlement of cash tokens between participants in real-time delivery-versus-payment (DVP) settlement.
The pilot project will also identify how it can leverage DTCC’s clearing and settlement capabilities to fully realize the potential benefits of a CBDC.
These benefits could include reduced counterparty risk and trapped liquidity, increased capital efficiency and added transparency for regulators.
DTCC is developing this ambitious project in collaboration with The Digital Dollar Project (DDP), a non-profit formed to encourage research and public discussion on the potential advantages and challenges of a U.S. CBDC.
Christopher Giancarlo, co-founder and Executive Chairman of The Digital Dollar Project 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.”
The project is bankrolled by Accenture. “Project Lithium is another key facet in the modernization of core capital markets infrastructure”, said David Treat, Global Metaverse and Blockchain Lead at Accenture and Co-Director of the DDP.
American President Joe Biden signed an Executive Order to watch over cryptocurrency that directs the Federal Reserve to examine the crypto space and find out whether the Central Bank should take a dive into crypto space and develop their own CBDC. As per the Bank of America Corp, the US will issue CBDC between 2025 to 2030.
