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Think tank launches ‘technical sandbox’ exploring United States CBDCs

September 2, 2022 Coin Telegraph

Accenture

The Digital Dollar Project’s Technical Sandbox Program is set to begin in October, aiming to provide a clearer understanding of the ramifications of a United States CBDC.

A United States think tank has launched a “technical sandbox” aimed at advancing the exploration of a potential United States central bank digital currency (CBDC).

In a Wednesday Tweet from Digital Dollar Project (DDP), the organization said the new program would explore “technical and business implementation” questions revolving around a U.S. CBDC.

The organization noted that the initial participants of the sandbox include crypto-firm Ripple, financial technology company Digital Asset, software platform Knox Networks and banking solutions firm EMTECH.

The Technical Sandbox Program aims to give the federal government, policymakers and the private sector a clearer understanding of how a potential CBDC would be rolled-out.

This includes the potential implications to retail and wholesale and international use cases such as cross-border payments.

The U.S Federal Reserve has yet to decide whether or not it will implement a CBDC but has been exploring the potential risks and benefits that come with them.

On Jan. 20, it released a discussion paper examining the pros and cons of CBDCs but neglected to give any hints about its future plans.

The paper suggested that CBDCs could act as digital money free from credit and liquidity risks, improve cross-border payments, help preserve the dominance of the U.S dollar, promote financial inclusion and extend public access to safe central bank money.

Potential risks found included a changed U.S financial system, more severe bank runs for other forms of money, reducing the power of monetary policy, operational resilience and a difficult balance between transparency and safeguarding consumer privacy rights.

Meanwhile, China’s own CBDC, the digital yuan, is quickly being rolled out across the country, while the same is occurring in Nigeria with the eNaira. The Bahamas and countries of the Eastern Caribbean Currency Union have also launched CBDCs, while Russia is set to roll out its own in 2024.

The FedNow service, an instant payment service set to be launched in mid-2023, aims to begin “technical testing” in September, according to a Monday press release. FedNow is seen as a step toward an eventual CBDC.

Davis Wright Tremaine LLP partner Alexandra Steinberg Barrage, a former FDIC policy expert, tweeted her support for the program on Wednesday. Barrage suggested that regardless of what your views are on a U.S. CBDC, pilot programs and data are essential when evaluating new tech.

No matter your views on a US CBDC (retail , wholesale), it's important to evaluate tech approaches alongside varied and complex policy issues. W/out data, robust public/private-pship, & pilots w/consumers and intermediaries, we cannot sharpen our thinking. @Digital_Dollar_ https://t.co/xLy02IOz6b
— Alexandra Steinberg Barrage (@alexbarrage1) August 31, 2022

The Technical Sandbox Program is set to begin in October with cross-border payments being the initial focus for the early participants.

The program is set to be released in two separate phases, including an educational phase and a pilot phase.

During the educational phase, providers and participants will seek to understand the technology from both a functional and business perspective. While in the pilot phase, the focus will be on identifying and testing specific ways in which CBDCs can be utilized.

The Digital Dollar Project is a partnership between the not-for-profit organization Digital Dollar Foundation and IT consulting firm Accenture. DDP seeks to encourage research and discussion around a U.S. CBDC and released a white paper proposing a tokenized U.S. digital dollar in May 2020.

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Accenture and Digital Dollar Foundation to trial United States CBDC this year

May 4, 2021 Coin Telegraph

Accenture

Five pilot programs will gather data on a digital dollar in the United States over the next 12 months.

Fortune 500 company Accenture has teamed up with Digital Dollar Foundation to conduct Central Bank Digital Currency, or CBDC, trials in the United States.

Announced on Monday, May 3, the newly formed Digital Dollar Project will carry out five CBDC pilot programs over the next 12 months. The project’s objective is to generate data to inform U.S. policymakers on how to develop a domestic digital currency.

The Digital Dollar Project will launch three pilot programs in the next two months, generating data on the functional, sociological, and business benefits of a digital greenback.

Al Jazeera reports that former chair of the Commodity Futures Trading Commission and co-founder of the Digital Dollar Foundation, Christopher Giancarlo, emphasized the lack of U.S. data regarding CBDC:

“There are conferences and papers coming out every week around the world on CBDCs based on data from other countries. What there is not, is any real data and testing from the United States to inform that debate. We’re seeking to generate that real-world data.”

However, the Fed is taking a cautious approach as the guardian of the world’s reserve currency, the report added, with chairman Jerome Powell responding that it is far more important to get a digital dollar right than it is to be fast.

Giancarlo countered that Powell was correct to be cautious, but warned that the U.S. could fall further behind as China pushes ahead with its own CBDC testing and deployment.

While the U.S. Federal Reserve has been conducting research into the technology and applications for a CBDC, the United States lags behind the digital currency initiatives currently ongoing in numerous other jurisdictions.

China’s central bank and leading state banks have recently been preparing to test the digital yuan for a shopping festival on May 5.

Accenture has also worked on a number of CBDC projects in other countries, including Canada, Singapore, France, and Sweden — which has already completed the first phase of its pilot.

According to a study by the Bank for International Settlements, 80% of the world’s central banks are already researching central bank-issued digital currencies.

Sweden’s central bank completes first phase of digital currency pilot

April 7, 2021 Coin Telegraph

Accenture

The Sveriges Riksbank said that CBDC technology still requires further investigation.

After completing the first phase of its digital currency pilot project, Sveriges Riksbank has found some critical issues that must be addressed before Stockholmers can buy coffee and kanelbullar with e-krona.

In a recent study, Sweden’s central bank presented the first results of its central bank digital currency pilot on a network based on R3’s Corda blockchain.

The Riksbank simulated core aspects of a potential CBDC system, including liquidity supply via the Riksbank’s settlement system, RIX, and network members serving as e-kronor distributors. The central bank also simulated participants, end-users and payment instruments like mobile apps.

The Riksbank said that the new CBDC technology needs further investigation, with scalability presenting a major bottleneck.

“The solution tested in phase one of the e-krona pilot has met the performance requirements made in the public procurement. But this has taken place in a limited test environment and the new technology’s capacity to manage retail payments on a large scale needs to be investigated and tested further,” the report noted.

The central bank also noted some privacy challenges, stressing that the information contained in an e-krona transaction must be protected to uphold banking secrecy laws and avoid revealing personal data.

“The Riksbank is currently analysing to what extent the information stored in the transaction history can be regarded as information covered by banking secrecy and whether it comprises personal data,” the bank stated.

Mithra Sundberg, head of Riksbank’s e-krona pilot division in Stockholm, said that Sweden’s CBDC could probably require a new legal framework before it can be used. Given the scope of issues that need to be addressed before an e-krona can be seriously developed, Riksbank may continue its blockchain pilots until 2026.

Riksbank stated that it will extend its agreement with accounting giant Accenture as a technical supplier to continue e-krona testing. The focus for the second phase will include potential distributors of the e-krona, CBDC performance in retail payments, as well as storage methods. The new phase will also test offline e-krona functionality and integration with existing point-of-sale terminals.

As previously reported, Sweden has emerged as one of the world’s earliest CBDC explorers, announcing a pilot platform for the e-krona in late 2019.

Accenture

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