The Digital Dollar Project has announced it will begin a pilot test for a Central Bank Digital Currency (CBDC) in the United States.
According to the official announcement, the primary goal of the Digital Dollar pilot test will be to “address some common challenges faced by different stakeholders, including consumers, businesses, financial institutions, and fintech,” with a defined set of use cases outlined.
According to the highlights, the pilot program has detailed a number of models that will serve as a basis for the general testing. Some of these include but are not limited to the tokenization of the digital dollar to make it a true instrument, ensuring that it is issued by the Federal Reserve, and ensuring that it is supportive and complementary to additional payment sector innovation.
The United States is somewhat lagging behind other major economies in the pursuit of a Central Bank Digital Currency. Jerome Powell, the Federal Reserve Chairman has often reiterated the need to get the digital dollar right, rather than early, a move that is understandable seeing that the US Dollar is the world’s reserve currency. This will make digitizing the currency a different approach from other countries’ CBDC programs.
With China in the advanced stages of its CBDC program, experts have warned that delaying the US CBDC push may make the country fall behind the Asian giant, which competes with the US for economic dominance.
With the launch of the Digital Dollar pilot test, however, the United States appears to be on the right track for the proposed CBDC development. Christopher Giancarlo, co-founder of the Digital Dollar Foundation said the pilot project will be to push for real-world data, an element that has been significantly lacking in the digital dollar pursuit.
“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.”
While the pilot will run for the next 1 year, no timeline is defined for the issuance of the Digital Dollar.
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