Digital currencies are being built by businesses and governments globally, and the Federal Reserve has determined that hands-on experience with a robust hypothetical Central Bank Digital Currency (CBDC) model is needed to understand the strengths, limitations, and design options provided by various digital asset technologies. This work is in no way focused at this time on building a CBDC for use, but rather is focused on technological research.
A key part of the Federal Reserve's effort to investigate CBDCs is Project Hamilton, a multi-year exploratory research collaboration between Boston Fed and the Massachusetts Institute of Technology's Digital Currency Initiative (MIT DCI) to investigate the technical feasibility of a general purpose CBDC that could be used by an economy the size of the United States. This effort was announced in August of 2020.
The first phase of this collaboration involves the release of a technical whitepaper accompanied by open-source code for a hypothetical CBDC platform, referred to as OpenCBDC. This phase is focused on technical requirements, such as the platform's ability to handle a certain number of transactions per second.
In the coming years, Project Hamilton Phase II will involve development and testing of design options and features to determine technical and performance tradeoffs associated with various designs.
Federal Reserve Board CBDC Discussion Paper
On January 20, 2022, the Federal Reserve Board of Governors released a policy framing paper titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation”. This paper examines the pros and cons of a potential U.S. digital currency, and to gather input from the general public on the creation of a CBDC.