Digital Dollar Project (DDP), which is a private initiative to launch the digital dollar, announced on Monday the upcoming launch of at least five pilot programs to test the feasibility of the Federal Reserve-issued central bank digital currency (CBDC).
The pilot programs will be launched over the next 12 months.
The non-profit organization for the research on a possible digital dollar was founded last year through a partnership with Accenture, which will provide the first phase of funding for the pilots. It is helmed by former US regulators and executives of the IT consultation giant.
“Central bank digital currencies will play an important role in how we modernize our financial systems — increasing access to and inclusion within them while also providing a valuable innovation frontier for new products and services in conjunction with other key innovations such as digital identity,” said David Treat, a Senior Managing Director at Accenture.
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Additionally, the announcement detailed that the pilots will explore, analyze and identify technical and functional requirements for the issuance of a digital dollar. These will further assess benefits and outstanding challenges, test applications and approaches, and assess the use cases for both retail and wholesale use.
The Need of a Digital Dollar
Despite the dominance of the US dollar in the international market, the country lagged in its CBDC efforts. China is the forerunner with its digital yuan efforts, while Japan and the United Kingdom are working in the digital fiat space.
Though the US Federal Reserve discussed digital dollars a few times, it is a private body that is launching the pilots. It is not sure how the US government will take the results of the study. However, one of the DDP directors revealed that the non-profit is in contact with the Federal Reserve.
“The U.S. doesn’t need to be first to the central bank digital currency, but it does need to be a leader in setting standards for the digital future of money,” J. Christopher Giancarlo, former CFTC Chairman and Co-Founder of DDP, said.
“We need to better understand how to balance the complex issues of a CBDC and how to incorporate key societal values, like privacy rights, financial inclusion and rule of law.”