BOSTON–The Federal Reserve Bank of Boston and a team of researchers said they remain engaged in a project aimed at solving the technical challenges of a central bank digital currency.
Chief among the challenges is designing a system that can handle more than 1.7 million transactions a second and settle payments in under two seconds, while operating 24/7 without service outages, according to a new paper.
The "Project Hamilton" research into a central bank digital currency (CBDC), published as a white paper, was developed strictly to test the feasibility of a digital currency and not to give any recommendations as to whether the Fed should create one, according to Engadget.com. The work being done is based on the open-source research software OpenCBDC, according to the researchers from MIT's Digital Currency Initiative and the Federal Reserve Bank of Boston.
Seeking to Make it ‘Flexible’
“The team said they aimed to solve the technical challenges of an CDBC, while making it flexible, depending on how policymakers decided implement a digital currency,” Engadget.com reported. “If it was ever adopted, it could allow people who lack bank accounts to gain financial services, while making cross-border payments easier and more secure. The work is still in the early stages, however, and issues like privacy and ease of exchange with foreign currencies still need to be studied.”
Along with the results, the researchers have open-source code for the platform, with the aim of gaining input from the public.
"There are still many remaining challenges in determining whether or how to adopt a central bank payment system for the United States," MIT's Digital Currency Initiative director Neha Narula was quoted as saying.
The Findings
Findings in the whitepaper include:
- The research team successfully created a core processing engine for a hypothetical general purpose CBDC and explored it in two architectures
- The work produced one transaction processing architecture capable of handling 1.7 million transactions per second
- The vast majority of transactions reached settlement finality in under two seconds within architectures that support secure, resilient performance and offer the significant technological flexibility required to adjust future policy direction
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