A who's who of the banking and finance sector is participating in a proof-of-concept project to explore the feasibility of an interoperable network of digital central bank liabilities and commercial bank digital money using distributed ledger technology.

The project will consist of three workstreams (technology, organization, and settlement) that will:
- Assess the feasibility of distributed ledger technology to enable the base use case;
- Illuminate technical and functional design considerations for the concept;
- Gain insight into the value of other potential use cases.
According to a post on the New York Federal Reserve website this morning, "Distributed ledgers enable a common source of truth for asset exchange as well as advancements in payments such as DvP (delivery versus payment) and PvP (payment versus payment) settlement."
However, the statement says current designs for exchange mechanisms based on distributed ledger technology do not enable interoperable transfer and settlement of digital assets between regulated financial institutions.
The Regulated Liability Network U.S. pilot program will run for 12 weeks, according to the NY Fed, and is designed to test the facilitation of digital asset transactions connecting deposits held at regulated financial institutions using distributed ledger technology.
The project will be conducted in a test environment and only use simulated data. Participants include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank and Wells Fargo. Swift, the global financial messaging service provider, is supporting interoperability across the international financial ecosystem.