This week, the New York branch of the US Federal Reserve published a report on the Phase I results of Project Cedar, “a multi-phase research effort to develop a technical framework for a theoretical wholesale central bank digital currency (wCBDC).” According to a press release, it currently takes two days for most foreign exchange spot trades to settle, exposing payment senders and receivers to “settlement, counterparty and credit risks that could, among other things, impede an institution’s ability to convert its assets into cash.” In Project Cedar Phase I, the experiment “simulated a foreign exchange (FX) spot trade and introduced a central bank digital currency prototype to test whether the use of blockchain technology could improve the speed, cost and access of cross-border wholesale payments.” In this test environment, the experiment should have revealed three key findings:
- Faster payments: In the test environment, transactions on the blockchain-enabled system were settled in less than 15 seconds on average.
- Nuclear settlement: The simulated ledger network enabled atomic settlement, meaning that the two sides of the simulated transactions were settled either simultaneously or not at all, reducing currency risk.
- Safer and accessible transactions: The distributed ledger system design enabled payments on a 24/7/365 basis and supported goals related to interoperability across financial institutions, including central and private sector banks.
Separately, a major global bank this week published a press release announcing “the world’s first digital bond listed and settled on both blockchain-based and traditional exchanges.” According to the press release, ”
In a recent notable item, a major South African grocery chain has reportedly announced plans to begin allowing customers to pay for groceries with bitcoin at 39 stores in South Africa using any bitcoin lightning-enabled app. According to reports, customers will scan a QR- code from the app and accept the conversion rate on your smartphone at the time of transaction.
The content of this article is intended to provide a general guide to the subject. You should seek specialist advice about your specific circumstances.
