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DTCC leverages DLT to build CBDC settlement and clearing infrastructure prototype

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As the US government advances its analysis into the risks and benefits of a Central Bank Digital Currency (CBDC), The Depository Trust & Clearing Corporation (DTCC), has developed a first prototype to explore how a CBDC might operate in the US clearing and settlement infrastructure leveraging distributed ledger technology (DLT).

The prototype, known as Project Lithium, will measure the benefits of a CBDC and inform the future design of the firm’s clearing and settlement offerings. It will also explore how a CBDC could enable atomic settlement, a conditional settlement that occurs if delivery and payment are both received at the same time.
 
As the markets evolve and become more digitalised, the use of printed US currency continues to decline while the adoption of tokenised securities grows at a rapid pace. Unlike private cryptocurrencies such as bitcoin, a CBDC would be issued and backed by the Federal Reserve, just like US paper dollars and coins.

With this prototype, DTCC, in partnership with The Digital Dollar Project (DDP), aims to demonstrate the direct, bilateral settlement of cash tokens between participants in real-time delivery-versus-payment (DVP) settlement. The pilot will also identify how it can leverage DTCC’s robust clearing and settlement capabilities to fully realize the potential benefits of a CBDC.

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