The Federal Reserve Bank of New York today published research demonstrating how a wholesale central bank digital currency could deliver significantly faster cross-border transactions. The New York Fed unveiled the first results of its Project Cedar research project on wholesale CBDC, which specifically examined whether blockchain technology could improve speed, cost and access to cross-border wholesale payments. Researchers said in the test environment they created, a blockchain-enabled distributed ledger system settled transactions in less than 15 seconds on average, enabled both sides to simultaneously settle a transaction, and enabled payments around the clock at any time of year.
The American Bankers Association has raised numerous concerns about implementing a retail or intermediated CBDC that were not addressed by the New York Fed research. Among other things, the association has said that a retail or intermediated CBDC would serve as an “advantaged competitor” to retail bank deposits, ultimately moving money away from banks and into accounts at the Fed where the funds cannot be lent back into the economy. ABA has also noted that many countries have pulled back on implementation of a CBDC as the costs of implementation have become apparent.