The Regulated Liability Network, a proof-of-concept digital currency network, was launched on Tuesday according to a set of banking organizations that includes HBSC, Mastercard, and Wells Fargo (RLN). In a statement, the group expressed their happiness at the opportunity to collaborate with the New York Innovation Center (NYIC) of the Federal Reserve Bank of New York.
The platform will leverage distributed ledger technology or blockchain to enhance financial settlements. Central banks, commercial banks, and “regulated non-banks,” such as BNY Mellon, Citi, PNC Bank, Swift, TD Bank, Truist, and U.S. Bank, would all take part.
Banking officials have long been interested in CBDCs, or central bank digital currencies. Similar to stablecoins, CBDCs are digital representations of a country’s fiat currency that are paired 1:1 with a particular fiat currency.
The RLN, according to the group, will exclusively accept U.S. dollars and run for twelve weeks. On a common blockchain, participants will issue fictitious digital tokens that represent consumer deposits and settle with fictitious central bank reserves.
The initiative will also have a regulatory structure that is in line with current laws including know your customer (KYC) and anti-money laundering rules. The possibility of expanding the platform to include additional digital assets like stablecoins will also be investigated.
There are more than a hundred nations currently working on their digital currencies. Recently, the Monetary Authority of Singapore (MAS) and the New York Innovation Center (NYIC) announced a cooperative experiment with wholesale central bank digital currencies (wCBDCs).