The Federal Reserve Bank of Boston and MIT’s Digital Currency Initiative published open-source research software to support a “theoretical” central bank digital currency on Thursday.
The Boston Fed and MIT have been jointly researching CBDCs for nearly two years, after Federal Reserve Governor Lael Brainard – who was recently nominated to be the Fed’s vice chair – announced the Boston branch of the U.S. central bank was investigating blockchain and a digital dollar. Thursday’s publication brings the central bank one step closer to a technical framework that could support a U.S. CBDC.
Boston Fed Executive Vice President Jim Cunha – who was then a senior vice president – told CoinDesk at the time that the branch was looking at technical issues in CBDC development, including whether distributed ledger technologies could even support a digital dollar.
“I would think we’re probably looking at 30 to 40 different either open-source or private solutions at a very high level first, and then doing a deeper dive into a few of them because we’re in the early stages of this, and we want to make sure we have the broadest view possible,” Cunha said in 2020.
Thursday’s publication, which includes OpenCBDC and a research paper, explain that the Boston Fed was able to develop “a core processing engine” for a general purpose CBDC that could support nearly two million transactions per second with high-speed settlement finality.
Project Hamilton, as the research effort was known, is now public for any contributors.
In a statement, Cunha said the research created a “scalable CBDC research model” that can help developers better understand “these technologies and the choices that should be considered when designing a CBDC.”
According to the white paper, developing OpenCDBC was only the first phase of the project. Phase two will test the different designs and features not included in phase one, as well as assess what, if any, trade-offs there might be with different sets of features.
Privacy and interoperability are two of the issues to be analyzed in phase two.
The Boston Fed’s research comes weeks after the Federal Reserve published its own white paper addressing policy questions raised by CBDCs and their use cases.
Privacy and financial stability risks were two key issues raised by the policy paper. The Fed also said it would want an explicit law from Congress authorizing it to issue a CBDC before it considers adopting or creating one as well.
