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Global financial services giants such as MasterCard, Citigroup and others are teaming up with the Federal Reserve Bank of New York to launch a 12-week pilot project for a digital dollar system.

The pilot dubbed the ‘Regulated Liability Network’ will be conducted in a test environment using simulated data, Reuters reported. In addition to MasterCard and Citigroup, major global banks HSBC and Wells Fargo are also involved in the pilot project.

The aim of the pilot project is to test whether banks can speed up payments by using a tokenized version of the dollar in a common database. The project therefore differs from traditional cryptocurrencies, which are not based on a database but rather on distributed ledgers.

A digital dollar is a form of central bank digital currency or CBDC to shorten it.

Opinions differ within the US government and the Federal Reserve on whether a CBDC is a good idea, with a US senator going as far as suggest a ban on CBDCs.

Similarly, many players in the traditional banking sector are also opposed to a digital dollar. According to the American Bankers Association, the alleged the benefits of a CBDC are “uncertain and unlikely to happen”, with a risk of weakening the economic model of the banks.

A U.S. CBDC is “not necessary to ‘digitize the dollar,’ because the dollar is largely digital today,” the bankers added in a letter to the Federal Reserve at the time.

Others, however, have a more positive view. Among them is Michelle Neal, head of the New York Fed’s market group, who said earlier this month that her team saw promise in using a CBDC to speed up settlement time.

The subject of the CBDC, in particular, was mentioned in President Joe Biden’s Crypto Executive Order from March this year. In it, the president said the United States should formally consider developing its own CBDC.

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