NY Fed Evaluates Wholesale CBDC For International Payments

The Federal Reserve Bank of New York has built a wholesale CBDC prototype for an experiment on blockchain-supported cross-border digital currency transactions.

Project Cedar, the initial initiative of the New York Fed’s innovation center, is a research endeavor to establish a technological foundation for a hypothetical wholesale CBDC.

The first part of the study mimicked a foreign currency spot deal and presented a wholesale CBDC prototype to explore if blockchain technology may enhance cross-border wholesale payment speed, cost, and accessibility.

Currently, most FX spot transactions take two days to settle. During this time, payment senders and receivers are vulnerable to settlement, counterparty, and credit risk, which may, among other things, impede an institution’s capacity to convert its assets to cash quickly.

The experiment determined that payments could be finalized in less than 15 seconds and that the simulated blockchain network supported the atomic settlement, meaning that both sides of a transaction may be paid simultaneously or not at all, hence reducing risks.

In addition, the architecture promoted interoperability by permitting transactions across networks of homogenous ledgers that represent a range of financial institutions, including central and private sector banks.

Per von Zelowitz, director of, the New York Innovation Center, says: “Project Cedar Phase I revealed promising applications of blockchain technology in modernizing critical payments infrastructure, and our inaugural experiment provides a strategic launch pad for further research and development regarding the future of money and payments from the US perspective.”