On April 16, Dr. Joachim Nagel, President of the Deutsche Bundesbank, the central bank of Germany, visited the MIT Media Lab. There, he announced this new collaboration between the Bundesbank and the DCI for central bank digital currency design research.
Read MoreIn November, MIT Digital Currency Initiative research scientist Daniel Aronoff participated in a panel discussion along with Ed Golding, Executive Director of the MIT Golub Center for Finance, on fintech and the digitization of finance at the MIT Research and Development Conference. The lively conversation touched on many topics relevant to DCI’s work, including safeguarding privacy in central bank digital currencies, decentralizing repo markets through smart contracts, and the future of cash.
Read MoreIn October, former central banker Chris Calabia of MIT’s Digital Currency Initiative (MIT DCI) gave a talk at The Institute of International & European Affairs titled “Towards a Central Bank Digital Currency? One View from the United States.”
In this, the second of the IIEA’s mini-series of webinars on the subject of central bank digital currencies (CBDCs), Chris Calabia, Head of CBDC Programs at the Massachusetts Institute of Technology (MIT) Digital Currency Initiative, shares recent research on the opportunities and challenges presented by the potential introduction of a CBDC like a ‘digital dollar’. Mr. Calabia addresses practical and policy questions that this digital asset could raise for our economies and societies, including whether CBDCs could promote greater financial inclusion and how to safeguard privacy while mitigating other risks like fraud and money laundering.
Read MoreThis week MIT’s Digital Currency Initiative (MIT DCI) released the source code of research into smart contracts for central bank digital currency (CBDC) – PArSEC (Parallelized Architecture for Scalably Executing smart Contracts). Given the solution is designed for central banks, it is a centralized offering and sidesteps using blockchain, although it supports Ethereum smart contracts.
The work is part of Project Hamilton, an initiative in conjunction with the Boston Federal Reserve and the source code is released under the umbrella of openCBDC.
It claims to have sufficient scale for most potential central bank applications, although it is very much a research project rather than pilot or production ready.
Read MoreThe Massachusetts Institute of Technology (MIT) Digital Currency Initiative (DCI) has introduced the experimental PArSEC platform. PArSEC — short for "parallelized architecture for scalably executing smart contracts" — is open source and developed with central bank digital currency (CBDC) in mind.
The developers highlighted the platform’s speed. It performed 118,000 ERC-20 transactions per second on 128 hosts — exceeding public permissionless blockchains, they said. The platform was thus capable of handling cross-border contracting and could be used to innovate supply chains and compliance checks as well.
Read MoreJames Lovejoy, of the Federal Reserve Bank of Boston, presented "Hamilton: A High-Performance Transaction Processor for Central Bank Digital Currencies" at NSDI '23. This paper was co-authored by Madars Virza, Cory Fields, and Neha Narula of the DCI and James Lovejoy, Kevin Karwaski, and Anders Brownworth of the FRBB, and it proposes the Hamilton transaction processor, one of the primary results of this collaboration.
The featured image on this post is by Thomas Hawk, and used under a Creative Commons license.
Read MoreCentral bank digital currencies potentially offer, in a digital form, the advantages of central bank money: settlement finality, liquidity and integrity. However, both offline and online commerce are susceptible to fraud and other kinds of disagreements. The existing techniques for managing fraud and disputes focus on giving users easy access to chargebacks, which relies on intermediaries to resolve disputes. Potential designs for CBDC may involve intermediaries in new and different ways, or may not use intermediaries at all, calling into question how to address fraud if CBDCs become widely used.
Read MoreLast summer, a special subcommittee of the US Senate met remotely to weigh the benefits of launching a central-bank digital currency, or CBDC—something that could, if optimally designed, transform the US financial system, making it more accessible to more citizens. For senators staring intently at their laptops, this was basically the first day of digital-currency school. And to introduce them to this highly technical world, the first witness that Senator Elizabeth Warren called was MIT Digital Currency Initiative director Neha Narula.
Read MoreThe Bank of England announced an agreement to collaborate on a twelve-month Central Bank Digital Currency (CBDC) research project with MIT Digital Currency Initiative. The agreement supports and builds on DCI’s ongoing research into CBDC, while also contributing to the Bank of England’s wider research and exploration of central bank digital currencies. While no decision has been made on whether or not to introduce a CBDC in the UK, the work will investigate and experiment with potential CBDC technology designs and approaches, and evaluate key tradeoffs, opportunities, and risks. This type of research can help inform wider policy development by contributing important technical ideas and questions.
Read MoreToday, the Bank of Canada announced an agreement to collaborate on a twelve-month CBDC research project with the MIT Digital Currency Initiative. The agreement supports and builds on the DCI’s ongoing research into CBDC, while also contributing to the Bank of Canada’s wider research agenda into digital currencies and fintech. The work will investigate and experiment with potential CBDC technology designs and approaches, and evaluate key tradeoffs, opportunities, and risks. While no decision has been made on whether or not to introduce a CBDC in Canada, this type of research can help inform wider policy development by contributing important technical ideas and questions.
Read MoreCollaboration with Federal Reserve Bank of Boston yields progress in understanding how a digital currency might be developed in the future.
CAMBRIDGE, Mass. -- In collaboration with a team at the Federal Reserve Bank of Boston, MIT experts have begun designing and testing technical research through which further examination of a Central Bank Digital Currency (CBDC) can be performed in the U.S.
The effort, known as Project Hamilton, is in an exploratory phase, and the research is not intended as a pilot or for public deployment. Instead, the researchers have explored two different approaches that could be used to process transactions, and thus could indicate the technical feasibility of a potential CBDC model. In a process involving significant design flexibility, the MIT group tested factors such as the volume and speed of transactions, and the resilience of the systems in general, among other requirements for a viable digital currency.
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