The US Federal Reserve is continuing its research into a “digital dollar” and has unveiled a technical specification for how it might work, The Washington Post has reported. Researchers designed a system that can handle more than 1.7 million transaction a second and settle payments in under two seconds, while operating 24/7 without service outages, according to a new paper on the subject

The “Project Hamilton” research into a central bank digital currency (CBDC) was developed strictly to test the feasibility of a digital currency and not to give any recommendations as to whether the Fed should create one. It’s based on the open-source research software OpenCBDC, according to the researchers from MIT’s Digital Currency Initiative and the Federal Reserve Bank of Boston. 

The team said they aimed to solve the technical challenges of an CDBC, while making it flexible, depending on how policymakers decided implement a digital currency. If it was ever adopted, it could allow people who lack bank accounts to gain financial services, while making cross-border payments easier and more secure. The work is still in the early stages, however, and issues like privacy and ease of exchange with foreign currencies still need to be studied. 

The Federal Reserve has been publicly investigating a digital currency for just a short time, having announced plans to carry out research in May of last year. The US has been behind other nations, particularly China, with the development of digital currencies. Central banks control CBDCs, making them more stable than cryptocurrencies, which can have wild swings in value over short periods of time. 

Last month, the Fed released a study detailing the pros and cons of a central bank currency. It deliberately avoided taking a stance on whether it should pursue the technology, as any such decision would be made by Congress and other policymakers. Rather, it focused on the potential benefits and pitfalls. It said on the one hand that a digital currency could make financial services more inclusive, but also warned that it would need to protect privacy, guard against financial crimes and be resilient. 

Along with the results, the researchers have open-source code for the platform, with the aim of gaining input from the public. “There are still many remaining challenges in determining whether or how to adopt a central bank payment system for the United States,” said MIT’s Digital Currency Initiative director Neha Narula.