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Major US Clearing House DTCC Building ‘Project Lithium’ to Test CBDC Real-Time Settlement

The Defiant | | Apr 13, 2022

CBDC clearing house tests - Major US Clearing House DTCC Building 'Project Lithium' to Test CBDC Real-Time SettlementIt takes a lot of complicated financial engineering to make it look like your stock market trades settle instantly. But in reality, it takes a vast shadow network of clearinghouses several days to shift your money around the market.

A new central bank digital currency (CBDC) prototype from the U.S. Depository Trust & Clearing Corporation wants to speed things up.

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On Apr. 12, the DTCC announced that it’s building ‘Project Lithium’, a CBDC prototype that it’s using to explore whether a Federal Reserve-issued digital currency could clear a trade as soon as a brokerage sends the money.

The DTCC is very important; it processed $2.37 quadrillion worth of securities in 2021. Greasing its wheels could increase the efficiency of the financial markets by freeing up liquidity that would otherwise be tied up for several days.

“Project Lithium represents the next major step in our exploration of DLT, tokenization, and other emerging technologies,” said Jennifer Peve, who heads strategy and business development at the DTCC. “[It] will lay the groundwork for the financial community to better evaluate the implications of a CBDC across the trade lifecycle.”

China Ahead

China is further along in this race. Beijing first trialed a digital yuan in December 2019 and launched pilots in Shenzhen and Suzhou during the first half of 2020. Those pilots had expanded to more than 20 cities by the Winter Olympics in February.

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Last month, Chinese officials estimated that the central bank had issued wallets to close to a fifth of China’s population – 261 million people – and that the network had processed nearly $14B billion.

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NCFA Jan 2018 resize - Major US Clearing House DTCC Building 'Project Lithium' to Test CBDC Real-Time SettlementThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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