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The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology (MIT) published a whitepaper detailing the feasibility of a digital dollar, or U.S. central bank digital currency (CBDC). The whitepaper describes a theoretical high-performance and resilient transaction processor for CBDC.

This effort to research CBDC, known as Project Hamilton, is a multi-year collaboration between the Boston Fed and MIT's Digital Currency Initiative. Project Hamilton focuses on technological experimentation and does not aim to create a usable CBDC at this time. In addition, the whitepaper – which is Phase 1 in Project Hamilton’s research plan – states the research is separate from the Federal Reserve Board's evaluation of the pros and cons of a CBDC.

Findings in the whitepaper include:

• the research team successfully created a core processing engine for a hypothetical general purpose CBDC and explored it in two architectures;
• the work produced one transaction processing architecture capable of handling 1.7 million transactions per second; and
• the vast majority of transactions reached settlement finality in under two seconds within architectures that support secure, resilient performance and offer the significant technological flexibility required to adjust future policy direction.

View the full whitepaper.

Relatedly, the Federal Reserve in January issued a public discussion paper that examines the pros and cons of a potential CBDC and invites comment from the public on the matter. Of note, this move from the Fed marked the first step in the discussion of whether and how CBDC could potentially improve the safety and effectiveness of the domestic payments system.

NAFCU outlined the paper and solicited member feedback in a Regulatory Alert sent to credit unions.

The association will monitor the Fed’s comment process on this topic closely and remains committed to ensuring a level playing field for credit unions in the financial services landscape.