The United States continues its exploration of a central bank digital currency (CBDC) as the main processor for US securities said it is developing a prototype for studying how such an asset can work in reality. The main goal is to examine how real-time transactions through cash-like tokens can pass through in the clearing and settlement process.
The Depository Trust & Clearing Corporation (DTCC), the country’s securities processor maintaining the post-trade market infrastructure, announced the development in a recent press release. It added that it’s the first-ever prototype for studying how CBDC may operate in the US clearing and settlement infrastructure by leveraging distributed ledger technology (DLT).
The prototype, known as “Project Lithium,” will test if the US market infrastructure can support the Fed-issued digital currency for daily payments. Unlike cryptocurrencies, such as bitcoin and Ethereum, a CBDC would be backed by the Federal Reserve and have the same value as the physical US dollar.
Through this project, the DTCC will measure the benefits of CBDC and inform the future design of the firm’s compatibility in managing such payments.
According to the announcement, the main goal is to “demonstrate the direct, bilateral settlement of cash tokens between participants in real-time delivery-versus-payment (DVP) settlement.” The DTCC will bring out a few pilot programs for retail and wholesale transactions and examine how they can fit into the American market infrastructure.