Digital Dollar using Blockchain Technology - Here's how

The magical marriage between the financial sector and information technology has given birth to many futuristic solutions thus far. The perks of this collaboration include better infrastructure, improved workflow, and increased customer satisfaction. Banks are an essential part of our lives, and it’s fantastic that technology is advancing our primary services. With efficient software solutions tailored to the needs of clients, the IT industry is assisting the financial sector in growing and progressing.

Banks are the backbone of a country’s economy. Through their functionality, they have the apparent power to shapeshift the world. It goes without saying that banks demand a high level of security since their operations are vast and they deal with a constant influx of money and data. Additionally, a bank is subjected to working with a variety of clients, including big corporations, industries, and start-ups. government-backed programs, and college students. As a system with limited capacity for work efficiency, it is imperative to manage all responsibilities swiftly and effectively. This leads to a significant change to satisfy all the requirements corresponding to daily growth.

Change is tough! Whereas change also indicates progress and betterment. Banks are the world’s most traditional operating systems that circle a gazillion amounts of data and money through multiple data recording sources. However, as the world evolves into a digitally-enabled phase, even banks are seeking closure on the much-needed shapeshifting of the system. The baby steps towards inculcating technology into the system have now turned into a marathon. Today, developed countries in the world are aiming to produce digital currency capable of changing the world forever. So here’s everything you need to learn about current developments and the role of IT services in the financial industry.

US Digital Dollar program with Big Banks:

On November 15, 2022, nine financial institutions in the USA, including Citibank, Wells Fargo, and Mastercard, launched a pilot program in association with the Federal Reserve Bank of New York, to test the feasibility of a digital dollar based on distributed ledger technology. The proof-of-concept pilot program, officially named Regulated Liability Network, tests the prototype for a better understanding of the digital dollar. The pilot is tentatively designed to run for 12 weeks of continuous effort.

The RLN project represents the biggest development in terms of the progress of a digital dollar to facilitate financial settlements. The construction of a digital dollar has been advocated by the Biden administration, and the United States has lately started investing resources in the project. With the White House formally endorsing the positive effects of the digital dollar, the Federal Reserve Bank is aiming to pace up the invention. Since the announcement, other coherent nations are also considering developing their central banks for digital currencies (CBDCs).

The 12-week proof-of-concept study will evaluate the viability of the regulated liability network, which is similar to the blockchain technology that supports bitcoin. The whole process will take place using a distributed ledger. To support the project, central banks, commercial banks, and regulated non-banks have joined hands to improve the financial situation. According to sources, the sudden push from the US government is related to the FXT disaster, which prompted lawmakers to push for a more regulated crypto market.

Banks claim that the pilot program will produce a positive outcome because blockchain technology has more potential than FTX claims. During the whole program, the US dollar will be represented as tokens and settled using fictitious central bank reserves on a shared multi-entity distributed ledger. The technology used in the pilot will be supplied by SETL and Digital Asset and will be used in a test environment.

Many reputed companies, notably BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo, are on the list of pilot program participants. Along with the New York Innovation Center (NYIC), a division of the Federal Reserve Bank of New York, Swift is another participant in the project.

Is India planning to launch a digital currency?

YES! With regulators scrutinizing the crypto markets, India too is aiming to adopt the Central Bank Digital Currency program through a regulatory pilot program akin to the U.S. 12-week pilot initiative. India is currently preparing to launch the virtual rupee in the fiscal year 2022-2023, beginning in April 2021.

Conclusion

According to Global X, the global blockchain market was valued at nearly $5 billion in 2021, with forecasts suggesting that it could grow over 10x to more than $67 billion by 2026. This massive prediction offers investors appealing global exposure to markets, encouraging them to make larger investments.

Web development has become a modern phenomenon, with more reputed blockchain companies worldwide viewing it as a state-of-the-art technology for efficient and secure operations. As such, the reach of blockchain goes beyond the realm of merely serving as the underlying technology for cryptocurrencies.

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