NY Fed, MAS Release CBDC Project Results
The New York Innovation Centre (NYIC) of the Federal Reserve Bank of New York and the Monetary Authority of Singapore (MAS) have released the findings of their joint “Project Cedar Phase II x Ubin+.” The study investigated the use of central bank digital currency (CBDC) for wholesale cross-border payments made with one or more vehicle currencies.
A vehicle currency is a highly liquid currency that serves as a bridge between two less liquid currencies. The vehicle currency is transformed into the first low-liquidity currency, which is subsequently turned into a second low-liquidity currency.
After considering the alternatives, the team decided to use hashed timelock smart contracts to bridge ledgers on different distributed ledger platforms in order to execute simulated cross-border, cross-currency payments. It also employs a “off-chain messaging channel.” According to the article, the approach might also operate on non-blockchain systems.
In all test cases, the project achieved compatibility by utilising hashed timelock contracts. Payments were settled atomically at a rate of 6.48 payments per second on average. End-to-end settlement took less than 30 seconds on average.
(With inputs from Shikha Singh)
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