FX Spot Execution in 10 Seconds: NY Fed Releases Results of Large-Scale CBDC Research
The Innovation Center of the Federal Reserve Bank of New York published a report on the first phase of their Project Cedar Wholesale Central Bank Digital Currency (wCBDC) on November 4th. Head of Markets Michelle Neal said at a presentation in Singapore, however, that she had examined FX spot settlement “from the Federal Reserve’s perspective”. Its prototype wCBDC, intended for financial institutions rather than the general public, was able to implement transactions significantly faster and more securely than the current standard.
A spot foreign exchange transaction was chosen as the use case for the 12-week first phase of Project Cedar because of its relative simplicity and the fact that this type of transaction is often used as part of larger, more complex transactions. It also represents a $7 trillion daily market, less than 40% of which is settled on a pay-for-pay basis and transactions typically take two days.
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