NY Fed “Project Cedar” Tests Wholesale CBDC for Enhanced FX Transactions
(11 November 202 – United States) The Federal Reserve Bank of New York (NY Fed) has introduced a wholesale CBDC prototype for an experiment on foreign exchange (FX) supported by blockchain technology.
The central bank’s New York branch has released the results of its Phase 1 trial of Project Cedar, a multiphase study designed to help develop a technical framework for a “theoretical wholesale central bank digital currency (wCBDC).”
The experiment demonstrated that wholesale cross-border digital currency transactions supported by blockchain technology can deliver faster, safer and more transparent international payments.
The pilot test vastly improved upon the current average time required for the clearing and settlement of transactions, reducing it from two days to under 15 seconds. The two day lag is known to increase counterparty, settlement and credit risks in so far as improving settlement speed was a primary objective of the project.
"Project Cedar Phase I revealed promising applications of blockchain technology in modernising critical payments infrastructure, and our inaugural experiment provides a strategic launch pad for further research and development regarding the future of money and payments from the US perspective" said New York Innovation Centre Director, Per von Zelowitz.
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