The Digital Dollar Project (DDP) has launched a central bank digital currency (CBDC) sandbox collaboration with leading blockchain and financial technology (fintech) firms like Ripple, Digital Asset, and others. The Technical Sandbox Program aims to explore the use cases, pros, and cons of a digital dollar implementation in the U.S.
Exploring U.S. CBDC in a Neutral Environment
While some central banks across various jurisdictions around the globe have successfully rolled out their central bank digital currencies (CBDCs), with some others at advanced stages of their CBDC development, the United States Federal Reserve is yet to decide on whether to tread the digital U.S. dollar path or not.
In the latest development, The Digital Dollar Project (DDP), a nonprofit organization that claims to be focused on encouraging research and public discussion on the potential merits and drawbacks of a U.S. CBDC, has launched what it calls the Technical Sandbox Program.
Per a statement by the DDP, its new Technical Sandbox Program aims to create a neutral environment that will enable the evaluation of a U.S. CBDC development from a technological, business, and policy angle. To make the project successful, the DDP has onboarded participants such as Ripple, Knox Network, Digital Asset, and EMTECH into its sandbox.
Jennifer Lassiter, executive director of the Digital Dollar Project said:
“The launch of our Technical Sandbox Program marks the next step in our effort to convene the private and public sectors in the exploration of a CBDC in the U.S. We understand how important it is to include a diverse set of views and expertise as we look to answer key questions about how the technology could work, the problems we hope to solve, and the ultimate business and individual outcomes we want to achieve.”
A Two-Phased Approach
The DDP Technical Sandbox Program participants will be responsible for formulating possible use cases of the digital dollar and exploring its potential implications for business strategies and more.
The Program, which is slated to go live later in October, will consist of two major phases: an education and a pilot phase. The DDP has made it clear that the education phase will enable participants to gain a business and functional understanding of the CBDC technology, while also allowing them to accurately gauge the differences in possible design choices.
The pilot phase, on the other hand, will make it possible for DDP partners and participants to identify and test various CBDC use case scenarios and evaluate their impact on businesses. The findings will then be used to inform stakeholders in both the private and public sectors.
The DDP says it expects the Technical Sandbox Program will enable participants to find answers to the various questions concerning a potential. U.S. CBDC. “Our Technical Sandbox Program offers the perfect environment to test the CBDC hypothesis in a neutral setting with real-world problems for consideration,” added Lassiter.
In related news, the European Central Bank (ECB) is currently in the investigation phase of its digital euro project. The apex bank says it could officially begin its digital euro development in 2023.