The Innovation Center of the Federal Reserve Bank of New York (NYIC) completes successful proof-of-concept
The NYIC has successfully completed its proof-of-concept of a regulated liability network (RLN) in collaboration with nine financial institutions and the Swift network. The project used distributed ledger technology and a simulated central bank digital currency (CBDC) to develop an infrastructure for exchanging and settling commercial bank deposit tokens and central bank liabilities.
Main Breakdowns:
- Transactions involving assets currently require back-and-forth messaging between parties
- The project aimed to develop a system that stores value in the ledger and provides settlement
- The simulated RLN had multi-asset settlement and maintained anti-money laundering safeguards
- The findings of the research were compiled into papers focusing on business, law, and technology
- The initiative excluded cryptocurrencies and stablecoins, focusing only on regulated assets
According to Tony McLaughlin from Citi Treasury and Trade Solutions, the RLN is a game changer for international users of the dollar and will support its role as the preferred international currency. The initiative is supported by top financial institutions and payment firms, including Amazon Web Services and SETL in partnership with Digital Asset.
Hot Take:
The completion of the NYIC’s proof-of-concept for the regulated liability network marks a significant step towards improving asset transactions and settlement. By utilizing distributed ledger technology and a simulated CBDC, the project has demonstrated the potential for a more efficient and secure system. The inclusion of anti-money laundering safeguards and the exclusion of cryptocurrencies and stablecoins further emphasize the focus on regulated assets. This initiative has the potential to revolutionize international transactions and solidify the dollar’s position as the preferred currency.
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