Most countries continue to hold out misguided hope for launching a CBDC. In the US, a new technical sandbox effort is underway courtesy of the Digital Dollar Project. That doesn’t mean a central bank digital currency will come to market anytime soon, as there are still many unknowns to address.
Digital Dollar Project Tries Again
Since its inception, the Digital Dollar Project has attempted to build excitement for a CBDC in the United States. Although there is no demand for such a solution, the project is confident it is the only path forward. The Digital Dollar Project is founded by former CFTC chair Chris Giancarlo and several others. Moreover, the venture is a not-for-profit effort to research and publicly discuss the opportunities of a central bank digital currency.
Whether the new technical sandbox effort will be successful is anyone’s guess. Most people know about the idea of a CBDC by now, but using a digital dollar regulated by banks and governments won’t change much for the average person on the street. Even so, the sandbox venture will kick off in October 2022 and feature a cohort of initial participants exploring cross-border payment opportunities.
Digital Dollar Project Executive Director Jennifer Lassiter adds:
“The Digital Dollar Project is excited to bring a broad array of industries and technical experts together to define desired outcomes and explore a wide range of technical design choices in relation to a US CBDC.”
The Federal Reserve remains cautious where central bank digital currencies are concerned. In January, the institution issued a report on the risks and benefits of CBDCs, although there was a stronger emphasis on the risks. In addition, the Fed purposefully decided not to share any of its CBDC plans with the world, indicating no clear path ahead. At this time, it doesn’t make sense for governments, banks, or consumers to work with a CBDC, but that situation may change over time.