Digital Dollar Project to launch five U.S. central bank digital currency pilots over the next 12 months

Today, the U.S. dollar and the euro combined account for 75% of all global financial transactions. Early last year, we wrote about the Federal Reserve after the central bank announced it planned to create a Digital Dollar Wallet this year. It’s unclear at this point if the Federal Reserve will be able to make this date considering the ongoing research effort with MIT. Today, the U.S. dollar and the euro combined account for 75% of all global financial transactions.

In August of last year, The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) partnered on a research effort focused on central bank digital currencies (CBDC).

Fast forward a few months later, a new project is bubbling up to test the potential uses of a U.S. central bank digital currency, the first effort of its kind in the United States.

Today, the U.S. nonprofit Digital Dollar Project (DDP) announced on Monday that it will launch at least five pilot programs over the next 12 months to measure the value of and inform the future design of a U.S. central bank digital currency (CBDC), or “digital dollar.”

The DDP is a non-profit partnership between Accenture and the Digital Dollar Foundation created last year to encourage research and public discussion on the potential advantages of a U.S. CBDC — a new form of money designed specifically for the digital world that complements the existing forms of physical and electronic monies.

According to the news release, the private-sector pilots initially will be funded by Accenture Plc. and involve financial firms, retailers, and NGOs, among others. The aim is to generate data that could help U.S. policymakers develop a digital dollar.

The pilots, for which Accenture is providing the first phase of funding, will explore, analyze and identify technical and functional requirements; assess benefits and outstanding challenges; test applications and approaches; and consider potential use cases for both retail and wholesale commercial utilization. The DDP will release to the public the results of and insights from the pilots for use in academic study, as well as policy consideration by Congress.

“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, who leads its Blockchain and Multi-Party Systems practice globally. “Accenture is excited to collaborate with the entire stakeholder community to learn from pilot programs across a range of use cases and share the outcomes and insights in an open and transparent manner.”

J. Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission and co-founder of the Digital Dollar Foundation, said, “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, which is why our pilot testing collaboration with Accenture and other partners is so critical. 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. Together, this project team will conduct research, experiment and develop thought leadership in an open manner in the interest of informing public policy.”

Adrienne Harris, who has advised financial institutions, fintech companies and venture capital firms, will also join the Digital Dollar Project’s Executive Board. Adrienne is a Senior Advisor at Brunswick Group and a Professor of the Practice at University of Michigan, where she’s a Gates Foundation Senior Research Fellow with the Center for Finance, Law and Policy. She was a special assistant for economic policy on President Obama’s National Economic Council, and a senior advisor to the deputy secretary of the U.S. Treasury Department.

The Project’s efforts are intended to complement other important CBDC work being conducted, including by the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology, and to help inform three of the key preconditions for a CBDC identified by researchers at the Federal Reserve.