DTCC Shares Findings from its Pilot with the Digital Dollar Project, Identifying Requirements for Supporting a U.S. CBDC in Securities Settlement

New York/London/Hong Kong/Singapore/Sydney ‒ November 30, 2022 ‒ The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, today published its latest whitepaper, “Exploring Post-Trade Security Settlement with a U.S. Central Bank Digital Currency,” in collaboration with The Digital Dollar Project (DDP) and support from Accenture. The paper outlines key findings from the pilot (formerly known as Project Lithium), the first private sector initiative to explore how tokenized securities and a wholesale Central Bank Digital Currency (CBDC) could operate within the U.S. settlement infrastructure leveraging distributed ledger technology (DLT). The pilot included participation from leading market participant firms including Bank of America, Citi, Nomura, Northern Trust, State Street, Virtu Financial and Wells Fargo.

“As a potential digital alternative to cash, a U.S. CBDC should be carefully explored in consultation with key stakeholders across the public and private sectors. DTCC’s pilot with DDP assessed the use of a simulated CBDC and DLT for DvP settlement in the U.S. wholesale markets through direct engagement with market participants,” stated Jennifer Peve, DTCC Managing Director, Head of Strategy and Business Development. “The results of the pilot can help inform market participants and U.S. policymakers about the many requirements related to this new technology and currency paradigm.”

DTCC’s pilot leveraged DLT, with the goal of demonstrating success in settling tokenized securities on DTCC’s Digital Settlement Network prototype against tokenized dollars on a simulated CBDC network provided by Accenture. Pilot participants provided feedback on the DDP and DTCC pilot through a series of workshops. The design included an architecture that connected two distinct asset networks to enable secure, resilient, and efficient security settlement leveraging CBDCs. The pilot also assessed network governance, creating mechanisms for a network administrator to resolve transactional issues while otherwise remaining in observation mode, ensuring that assets were settled on both networks, minimizing communication dependencies between parties, and eliminating counterparty risk at the time of settlement.

Key findings from the whitepaper include:

• CBDC Design: Multilateral settlement and asset encumbrance mechanisms are core functional requirements for post-trade settlement. Broader access to a digital Federal Reserve payments system could present new opportunities within the settlement bank model and drive innovation in traditional industry responsibilities.
• Network Connectivity & Design: When settlement of securities and cash occur on separate and distinct networks, orchestration between the networks is required to ensure settlement. The pilot’s orchestration model between the two distinct networks reduced counterparty risk at the time of settlement and provided settlement guarantees. Moving forward, this approach may provide a governance model for future implementations.
• Business Implications for Settlement & Reporting Processes: Based on the pilot results and feedback from industry participants, a CBDC network offers the potential to achieve operational efficiencies and enhance transparency and reporting capabilities.
• Opportunities for Future Exploration: The whitepaper outlines opportunities for future exploration, including industry adoption rates and implementation costs. These areas should be further evaluated to help key stakeholders better understand the impacts that the introduction of CBDCs may have on settlement.
  “The findings from this pilot serve as crucial information to inform worldwide CBDC developments and conversations that are rapidly increasing across sectors,” said Jennifer Lassiter, Executive Director of The Digital Dollar Project. “DDP thanks DTCC for their leadership on this pilot and the participants for their thoughtful engagement throughout this effort. Understanding the impact of CBDC technology on this critical aspect of financial market infrastructure is imperative to the evolution of U.S. markets and will inform further CBDC research and experimentation globally."

“Accenture is pleased to have supported DTCC and DDP in their efforts to explore the value of digital currency and tokenization in the evolution of our capital markets," said David Treat, Senior Managing Director and Global Metaverse Co-lead at Accenture. “DTCC's experience, leadership, and innovation paired with the DDP's diverse community of experts and stakeholders is a powerful combination that will help shape the impact that digital currency will have on the transformation of financial infrastructure.”

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ABOUT DTCC

With over 50 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From 19 locations around the world, DTCC, through its subsidiaries, automates, centralizes, and standardizes the processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for thousands of broker/dealers, custodian banks and asset managers. Industry owned and governed, the firm innovates purposefully, simplifying the complexities of clearing, settlement, asset servicing, transaction processing, trade reporting and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem. In 2025, DTCC’s subsidiaries processed securities transactions valued at U.S. $4.7 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $114 trillion. DTCC’s Global Trade Repository service, through locally registered, licensed, or approved trade repositories, processes more than 25 billion messages annually. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, X, YouTube, Facebook and Instagram.

About The Digital Dollar Project (DDP)

A non-profit organization, The Digital Dollar Project was created to encourage research and public discussion on the potential advantages and challenges of a U.S. CBDC — or a “digital dollar.” DDP will identify options for a CBDC solution to help enhance monetary policy effectiveness and financial stability; provide needed scalability, security and individual privacy in retail, wholesale and international payments; and integrate with existing financial infrastructures, including U.S. Federal Reserve-related projects. Read the DDP Privacy Principles and “Digital Dollar Paper: Exploring a Digital Dollar. Visit http://digitaldollarproject.org.