SETL, which Colendi bought last September, has become the technology partner of the New York Federal Central Bank. The project will be a first in the world in terms of the infrastructure it targets.
UK-based SETL, which was acquired by Colendi, one of Turkiye’s leading financial technology companies, last September, is among the main technology partners of the New York Innovation Center (NYIC) digital asset utilization project under the New York Federal Central Bank. Leading financial institutions such as Citi, BNY Mellon, Wells Fargo, HSBC, PNC Bank, U.S Bank, TD Bank, Mastercard and Swift were also involved in the project.
Within the scope of the project, SETL will test the ability to create an interoperable network between digital central banks and commercial banks by using distributed ledger technology. After the proof-of-concept study, the project is planned to continue with the Design and Test steps.
The realization of the infrastructure targeted by the project means the elimination of one of the most important problems encountered in digital asset transactions in the world so far. The infrastructure in question is one of the necessary conditions for the realization of the digital dollar.
A regulated responsibility network (RLN) will be used.
Using the Regulated Liability Network (RLN), first conceptualized by Citi, the study aims to support central bank liabilities, commercial bank digital currencies and liabilities of non-bank issuers using a single distributed ledger technology network.
Colendi subsidiary SETL’s ability to cope with the scalability challenges encountered in many distributed ledger technology projects (primarily SWIFT) played an important role in its involvement in the project.
The goal is to eliminate the problem of reconciliation in digital transactions between banks.
NYIC (New York Innovation Center) digital asset project, aims to solve a consensus problem that arises from the incompatibility between them due to differences in design, even though each of them is based on blockchain, that is, distributed ledger technology, when interbank transactions are desired with digital currencies issued by different private banks.
While there are several alternatives to circumvent this consensus problem, each results in varying degrees of time, energy, and/or value loss.
More than 90% of central banks worldwide are working on Central Bank Digital Currency (CBDC) projects. The US Federal Reserve, on the other hand, is in the discovery phase. The main reasons for central banks’ interest in digital currencies are the dwindling use of cash, the ever-increasing use of digital assets by consumers around the world, the erosion of central banks’ innovative identities, and their effort to increase their influence on increasingly globalized payment systems.
Before the US central bank issues any digital assets, the FED aims to create the infrastructure for private banks to be able to transact with digital currencies on the same network without a consensus problem.
- SETL will work closely with the Federal Reserve Bank of New York and leading financial institutions on the project.
- After the proof-of-concept work is completed (after a 12-week period), the project is planned to continue with the Design and Test steps.
Source: Egirisim / Translated by Irem Yildiz