U.S. Banks and Mastercard Test the Digital Dollar

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The Federal Reserve and mainstream banking firms are collaborating to test a platform for digital currency. The Regulated Liability Network, a proof-of-concept digital currency network, was launched on Tuesday according to a collection of banking organizations that includes HBSC, Mastercard, and Wells Fargo (RLN).

The group expressed its pleasure in collaborating with the New York Innovation Center (NYIC), which is part of the Federal Reserve Bank of New York, in a release.  An unclear legal climate is forcing several major banks to watch for opportunities to enter the cryptocurrency market. 

According to the consortium, the platform would make use of chances to enhance financial settlements by using distributed ledger technology, sometimes known as a blockchain. A wide range of central banks, commercial banks, and "regulated non-banks," which include Citi, PNC, TD, Truist, and U.S banks will participate.

Central bank digital currencies have long attracted the attention of banking officials. Similar to stablecoins, CBDCs are digital representations of a state's fiat currency that are paired 1:1 with a particular fiat currency.

The RLN, according to the group, will exclusively accept American dollars in digital format and run for twelve weeks. Tokens representing consumer deposits will be issued on a common blockchain, and they will settle with fictitious reserve accounts of central banks.