According to a report issued by the NYIC, an organization founded to study the CBDC, or “Digital Dollar,” is constructing a “technology framework for a hypothetical” deployment of this digital asset. The research centre, which was established in collaboration with the Bank of International Settlements Innovation Hub (BISIH), focuses on a wholesale implementation of the CBDC.
According to the report, the NYIC considered this preliminary testing phase to have been fruitful. The trial occurred for 12 weeks, during which time blockchain technology was used to settle a transaction on a mock foreign exchange market. This phase investigated if digital assets can “provide swift and secure payments” at a reduced settlement cost.
According to the analysis, traditional financial railroads can settle an FX market wholesale transaction in more than 48 hours. The “Digital Dollar” put to the test by the New York Fed was much quicker could decrease counterparty and credit risk, and gave institutions more flexibility and resources to devote elsewhere.
The NYIC settles a transaction within 15 to 10 seconds on average. These outcomes represent a substantial improvement over conventional settlement procedures.
In addition to its speedy transactions, the test demonstrated that a CBDC might provide “atomic settlements,” the potential for parties to complete a transaction instantly or not at all.