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DTCC's Project Lithium to assess implications of CBDC on market infrastructure

DTCC's Project Lithium to assess implications of CBDC on market infrastructure

The Depository Trust and Clearing Corporation (DTCC) is developing a prototype to test the ability of US clearing and settlement infrastructure to support a Fed-issued central bank digital currency using a DLT platform.

The prototype, known as Project Lithium, will measure the benefits of a CBDC and inform the future design of the Depository's clearing and settlement offerings. It will also explore how a CBDC could enable atomic settlement, a conditional settlement that occurs if delivery and payment are both received at the same time.

DTCC is working on the prototype in collaboration with The Digital Dollar Project, a non-profit led by former US regulators, tech leaders and executives from Accenture.

The pilot aims to demonstrate the direct, bilateral settlement of cash tokens between participants in real-time delivery-versus-payment (DVP) settlement and assess the implications for counterparty risk, capital efficiency and automated workfow.

“DTCC has for several years been experimenting, engaging and leading the conversation around the digitalization of financial markets, and Project Lithium represents the next major step in our exploration of DLT, tokenization and other emerging technologies,” says Jennifer Peve, managing director, head of strategy and business development at DTCC. “Project Lithium will lay the groundwork for the financial community to better evaluate the implications of a CBDC across the trade lifecycle, as interest in this style of funding continues to grow.”

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