DTCC Studies Operation of CBDC in Clearing and Settlement

DTCC (Depository Trust and Clearing Corporation) has announced it is developing a prototype to explore how a CBDC might operate in the US clearing and settlement infrastructure leveraging DLT (distributed ledger technology).

The 'Project Lithium' prototype, being developed in partnership with the Digital Dollar Project, will test the ability of US market infrastructure to support a US dollar CBDC using a DLT platform.

Project Lithium will measure the benefits of a CBDC in clearing and settlement, inform the future design of DTCC's clearing and settlement offerings, and explore how a CBDC could enable atomic settlement.

With the prototype, DTCC is seeking to demonstrate the direct, bilateral settlement of cash tokens between participants in real-time DvP settlement.

The pilot will also explore how a CBDC can reduce counterparty risk and trapped liquidity, increase capital efficiency, enable more efficient and automated workflows, ensure settlement finality, and provide transparency to regulators.

"Project Lithium will lay the groundwork for the financial community to better evaluate the implications of a CBDC across the trade lifecycle, as interest in this style of funding continues to grow," said Jennifer Peve, DTCC managing director and head of strategy and business development.

Source: Regulation Asia