J. Christopher (Chris) Giancarlo, former Chair of the Commodity Futures Trading Commission (CFTC), along with Charles Giancarlo and Daniel Gorfine, have partnered with Accenture to create the Digital Dollar Project (the Project) to advance exploration of a United States Central Bank Digital Currency (CBDC).
The purpose of the Project is to encourage research and public discussion on the potential advantages of a digital dollar, convene private sector thought leaders and actors, and propose possible models to support the public sector. The Project will develop a framework for potential, practical steps that can be taken to establish a dollar CBDC.
“The digital 21st century is underserved by an analog reserve currency,” said Chris Giancarlo. “A digital dollar would help future-proof the greenback and allow individuals and global enterprises to make payments in dollars irrespective of space and time. We are launching the Digital Dollar Project to catalyze a digital, tokenized U.S. currency that would coexist with other Federal Reserve liabilities and serve as a settlement medium to meet the demands of the new digital world and a cheaper, faster and more inclusive global financial system.”
To help launch the Project, Chris and Charles Giancarlo and Daniel Gorfine are forming the Digital Dollar Foundation (The Foundation), a not-for-profit organization. The Foundation has engaged Accenture as lead architect and technology innovation partner. “Accenture has a record of innovative collaborations with central banks. It includes work with the Bank of Canada, the Monetary Authority of Singapore, European Central Bank, and most recently with the intent of Sweden’s Riksbank — the world’s first central bank—to sign an agreement to develop an e-krona CBDC in a test environment, so they were the obvious choice for guiding this process,” said Chris Giancarlo.
The Project’s formation follows from Chris Giancarlo and Gorfine’s Oct. 15, 2019, Wall Street Journal Opinion piece, ‘We Sent a Man to the Moon. We Can Send the Dollar to Cyberspace.’ The Project will explore design options and approaches for creating a digital dollar through a deliberative process, including stakeholder meetings, roundtable discussions, and open forums, and be based on careful consideration of core governmental interests, support for existing U.S. Federal Reserve (Fed) related projects, and a focus on a set of key guiding principles.
These principles will be tested against a wide range of stakeholder needs and use case requirements to ensure that design inputs for a digital dollar optimize its value; adhere to core U.S. legal, security, privacy, economic and cultural requirements, and serve to advance the needs of global financial systems and consumers.
“Accenture is pleased to partner with the Digital Dollar Foundation to advance the project by helping to bring together an expert multistakeholder community to take maximum advantage of real-world experience and the latest technological capabilities,” said David Treat, senior managing director and global Blockchain lead at Accenture. “Central Bank Digital Currency is a key enabler for the modernization of financial systems and will drive material economic and social improvements and form the basis for a wave of new innovation.”
A dollar CBDC would represent the third format of currency and, similar to paper currency, be backed by (and therefore be treated as a liability of) the Fed. This is a key distinction with tokenizing bank money, which is a liability of the issuing commercial bank. The aim of a CBDC is to be portable, in a digital format, and able to send as easily as a text.
There has been minimal innovation in central bank money since the proliferation of banknotes and cashless transfers during the 19th century. A digital dollar would offer new scope and possibilities for the secure and instantaneous settlement in dollars through consumer banks and trusted payment intermediaries. It will have to preserve, as well as offer full integration with, the existing financial system. It must also reduce costs, foster security, improve transparency, and serve as an effective digital settlement medium nationally and internationally to make the dollar a better currency for all of its global users.
As the first phase of a multiphase journey, the Project will consider initial designs and proposals for a dollar CBDC and will enlist the participation of individual economists, business leaders, technologists, innovators, lawyers, academics, consumer advocacy, and human rights experts, and ethicists.
Going forward, the Project will work to develop a framework for testing and learning about digital dollar capabilities and implementation practicalities. The ongoing pace and direction of the Project will be assisted by a steering body that will be proposed alongside the framework. The Project intends to share its findings with key stakeholders, and based on those findings and feedback, begin consideration of possible future work.