The New York Innovation Center, as part of the Federal Reserve Bank of New York and Singapore’s Central Bank (MAS), has jointly announced their plans to work together to assess the efficacy of large-scale central bank digital currencies (wCBDCs). Central Bank Digital Currency (CBDC) is a form of digital fiat money that has previously been generated or will soon be developed by the central banks of various countries.
Federal Reserve and MAS Launch Project Cedar Phase II x Ubin+
Within the confines of Project Cedar, the two institutions will work together to determine how wCBDCs can increase the efficiency and productivity of multilateral large-scale revenues using a variety of currencies. Firstly, the small concession of multilateral, foreign exchanges will begin with the practice of wCBDCs as a concession asset.
In order to minimize the level of risks incurred from multilateral foreign exchange concessions, the two organizations have already begun performing various examinations involving connecting multiple eclectic virtual currency ledgers. The project has been developed to promote the association and functionality of large-scale digital currencies.
The Assistant General Director of MAS Markets and Development, Leona Sing Chiong, commented that the newly launched project aims to increase efforts worldwide to evaluate the benefits and objectives of large-scale CBDCs’. Chiong explained that the project would also provide all necessities to help build the foundations for an accessible and functional monetary infrastructure in the future.
According to reports, the results from Project Cedar will be officially disclosed in 2023 at a scheduled date.
Federal Reserve has Announced no Plans to Issue a CBDC
Although the Fed is currently undergoing various operations involving CBDC and its benefits, the organization has revealed no plans to issue CBDC in the future. The Executive VP and Director of the Markets Group at NY Fed, Michelle Neal, clarified the possible issuance of a CBDC during an exposition in Singapore. Neal explained that the Federal reserve has thoroughly examined and inspected foreign exchange concessions, and their findings have not induced any intent to put out a CBDC officially.
Neal further added that for the central banking community to thoroughly understand and realize the massive potential of digital assets and CBDCs, then proper experimental measures are essentially required. Even if the Fed has no plans to issue a CBDC yet, the Project Cedar experiment and the official alliance will offer more knowledge of CBDCs and provide a deeper understanding of the process of multi-currency ledger systems by exploiting their unique blueprints.
Furthermore, the project assumes a realistic perspective and intends for any future large-scale CBDC to be interoperable with many networks while also honoring each network’s autonomy.