Depository Trust & Clearing Corporation (DTCC), an American post-trade financial services firm, announced plans to create a novel digital USD. The DTCC hopes to utilize the digital US dollar in the country’s clearing and settlement sector.
The initiative, codenamed Project Lithium, will consider the possibilities of a Central Bank Digital Currency (CBDC), which could operate via distributed ledger technology. DTCC, which offers logistics services to firms in the financial sector, said that project would serve as a basis for subsequent DTCC logistics designs.
Additionally, the clearing and receiving firm says it intends to explore how a digital dollar could support atomic payments. Atomic settlements refer to payments which occur whenever settlements and delivery occur simultaneously.
The American post-trade financial services firm is reportedly building the Project Lithium prototype via collaboration with “The Digital Dollar Project.” The project initiators say the central purpose of the project is to showcase that cash tokens could enable delivery-versus-payment settlements.
Moreover, DTCC says its prototype will help demonstrate the potentials of the CDBC in leveraging the company’s mainline resources. Possible benefits of the proposed digital dollar include better process efficiency, automation, lowered risks, and more openness to government.
The Digital Project reportedly obtained funding from Accenture for financing a set of prototypes to explore the possibilities of a CBDC in the American financial and social context.
What the Front-liners Said
Speaking about the development, Christopher Giancarlo, Executive Chairman of The Digital Dollar Project (TDDP) said that the CDBC could help enlarge access to the US central bank. He also went on to appreciate DTCC for the collaboration to help the country explore the prospects and challenges of a national electronic dollar.
Giancarlo further hailed the benefits of CDBC to possibly improve the overall efficiency of financial transactions, making them faster and cheaper. The prototype digital currency, Giancarlo, would imitate tangible cash.
Jennifer Peve, a Managing Director at DTCC, also highlighted that their company had a history of leading crucial conversations around a digitalized financial system. Project Lithium, Peve says, would set up a foundation for the financial system to further assess the possibilities of a CDBC in an economy that’s increasingly interested in going digital.
Arriving at a Digitalized Economy
While the US capital and securities markets transform into a more digital status, usage of tangible cash plummets against the rise of tokenized assets. The new prototype project proceeding from the partnership between DTCC and TDDP is one of the significant actions in that direction.
The announcement of the prototype goes public a few weeks after President Biden ordered the US Treasury Department and Federal Reserve to explore the possibilities of a Central Bank Digital Currency.
Previous DTCC Projects
The Depository Trust & Clearing Corporation (DTCC) had executed different similar projects exploring the possibilities of better virtual currencies, with respect to clearing and receiving transactions.
One of such projects is Project Whitney, a 2020 proposal which probed into the possibilities of how Ethereum could enable financial transactions using personal virtual currencies. DTCC also launched Project Ion to examine ways in which the company could enhance the efficiency of clearing and payment services.