- PoC project will closely study the viability of an interoperable virtual money platform.
- The newly launched project abides by the current regulatory guidelines.
- The project will explore the feasibility of programmable digital money design.
On Tuesday, the US banking community members announced the rolling out of a proof of concept (PoC) project. As per the official statement, the project will closely study the viability of an interoperable virtual money platform known as the regulated liability network (RLN).
The money platform will deploy distributed ledger technology for creating innovative opportunities. The platform would further improve financial settlements and also let central banks, large-scale or small-scale commercial banks, and regulated non-banking entities to proactively participate in the process.
The PoC project will run for 12 weeks and abide by the current regulatory guidelines such as know your customer and the anti-money laundering requirements.
The project will test a version of the RLN design operating solely in USD with commercial banks generating simulated virtual money or fully fungible and redeemable tokens that are representations of customers’ deposited sum. The transactions will then be processed through simulated central bank reserves on a shared multi-entity distributed ledger.
The initiative will see how viable the proposed system would be in the current regulatory framework. It will also explore the feasibility of programmable digital money design and if it can later include stablecoins and other currencies.
PoC is introduced with contributions from New York Innovation Center (NYIC), a part of Federal Reserve Bank of New York. The ledger technology for the project is offered by SETL with Digital Asset, powered by Amazon (NASDAQ:AMZN) Web Services.
The inferences of the pilot project will be reported after its conclusion. Note that the banking community members are not committed to any phases of work in the future after the PoC has been completed.
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