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May 4, 2021

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Pilot projects to test US digital currency options

Source: Agencies | 00:05 UTC+8 May 4, 2021 | Print Edition

US nonprofit Digital Dollar Project said was due yesterday to launch five pilot programs over the next 12 months to test the potential uses of a US central bank digital currency, the first effort of its kind in the United States.

The private-sector pilots initially will be funded by Accenture Plc and involve financial firms, retailers and NGOs, among others. The aim is to generate data that could help US policy-makers develop a digital dollar.

A partnership between Accenture and the Digital Dollar Foundation, the Digital Dollar Project was created last year to promote research into a US central bank digital currency.

“There are conferences and papers coming out every week around the world on CBDCs based on data from other countries,” said Christopher Giancarlo, former chair of the Commodity Futures Trading Commission and co-founder of the Digital Dollar Foundation.

“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. CBDCs are the digital equivalent of banknotes and coins, giving holders a direct digital claim on the central bank and allowing them to make instant electronic payments.

While debit cards or payment apps are a form of digital cash, they are created by commercial banks based on money central banks credit to those accounts. Cryptocurrencies are controlled by private actors. Central banks around the world, including in China and Europe, are revving up CBDC projects to fend off threats from cryptocurrencies.

The US Federal Reserve is working with the Massachusetts Institute of Technology to build a technology platform for a hypothetical digital dollar. The pilots, three of which will launch in the next two months, will complement the Fed’s MIT project by generating data on the functional, sociological, business uses and other facets of a digital dollar.

David Treat, a senior managing director at Accenture, said CBDCs would exist alongside other forms of physical and electronic money, rather than replace them. “It’s not a panacea for all money,” Treat said. “We will be using physical cash and coin for some time.”

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