Boston Fed, MIT complete research project into feasibility of a central bank digital currency Boston Fed, MIT complete research project into feasibility of a central bank digital currency

Bank says Project Hamilton work with MIT accomplished aims, invites 'the world' to build on progress Bank says Project Hamilton work with MIT accomplished aims, invites 'the world' to build on progress

December 22, 2022

A joint research effort between the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology into the technical feasibility of a potential central bank digital currency is now complete.

The Boston Fed’s work on CBDC with MIT’s Digital Currency Initiative is known as Project Hamilton. Boston Fed Executive Vice President Jim Cunha said the now-concluded project was “agnostic” from the start about any future policy decisions regarding new technologies and U.S. currency.

Instead, Cunha said, the project focused on better understanding the capabilities and limitations of different technologies that might be used to manage and transfer CBDCs.

“Project Hamilton took critical early steps toward a deeper understanding of how money might work better for all,” Cunha said.

Early this year, Project Hamilton published its research on a transaction processor for a theoretical high-performance and resilient CBDC. The processor was developed as open-source research software, called OpenCBDC, and project leaders urged global contributors to continue working on it.

“The OpenCBDC codebase that resulted from this successful collaboration provides a credible and unbiased resource to evaluate design choices and ensure that a potential future CBDC could serve the public’s interest,” said Neha Narula, director of the Digital Currency Initiative.

Research was ultimately about how money might work in the future

Project Hamilton was named for central bank “Founding Father” Alexander Hamilton and pioneering MIT and Apollo Mission computer scientist Margaret Hamilton. Boston Fed Assistant Vice President Bob Bench said the team “wanted a better understanding of how money could work in the future.”

“We think Project Hamilton helped not only the financial services sector, but the greater public, which relies upon fast, accessible, and safe money,” Bench said.

The project was announced in 2020, and in February 2022, the Boston Fed and MIT released the OpenCBDC software and a whitepaper describing their initial findings.

OpenCBDC is a core processing engine for money that focuses on security, performance, scalability, and flexibility. It provides a codebase that supports 1.84 million transactions per second and settlement – meaning the transaction is completed – of under one second.

After the whitepaper and code were released, Project Hamilton researchers added functionality to OpenCBDC (for instance, programmability and audit capabilities) that may be useful to evaluate a potential CBDC. The idea was to determine how those functions would impact performance, scalability, and security.

Leaders believe they’ve left strong foundation, effective collaboration model

Researchers at the Boston Fed and MIT said they plan to release additional retrospectives on Project Hamilton’s findings in the coming months. Narula said she believes the project gave researchers a strong foundation for understanding the policy and technology choices that arise in the context of a CBDC.

“Our collaboration with central banks such as the Boston Fed is at the heart of DCI’s ongoing mission to serve as a neutral convener of governments, academics, open-source communities, and the private sector,” Narula said. “We hope that this collaborative, open-source research effort is a model for researchers from academia and the public sector to build on as we explore the future of money.”

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