BPI Statement on the Regulated Liability Network Proof of Concept Findings

Washington, D.C. – Today a diverse group of payments industry participants from both the public and private sectors announced the findings from the Regulated Liability Network (RLN) U.S. Proof of Concept. Paige Pidano Paridon, senior vice president and senior associate general counsel, issued the following statement in response:

The success of Phase 1 of the RLN demonstrates the ability of the regulated financial system to innovate while maintaining stability and dollar supremacy as well as safeguarding against risks like illicit finance. Novel payment methods, like central bank digital currencies and unregulated stablecoin alternatives, remain costly distractions.

What’s the purpose of the RLN?

The RLN is a theoretical project to determine whether shared blockchain technology could be applied to all regulated monies (e.g., central bank money, commercial bank money and e-money) on a common platform. Phase 1 served as an initial 12-week effort between the Federal Reserve Bank of New York’s Innovation Center and a collection of technology firms, banks and payment service providers. The collaboration examined the viability from a legal, technical and business perspective.

The RLN is unlike CBDC. Here is why:

CBDCs are a liability of the central bank and would disintermediate the private sector. A CDBC would shift money out of bank deposits and into cash – the equivalent of consumers keeping money under their mattresses – and reduce banks’ ability to lend. While supporters of a U.S. CBDC tout its purported benefits, such as furthering financial inclusion and preserving the U.S. dollar as the global reserve currency, there is no evidence supporting these assertions.

Unlike a CBDC, the RLN would maintain the current respective roles and benefits of central bank money and commercial bank money while enhancing their capabilities to improve payment efficiency.


About Bank Policy Institute.

The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.

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