Federal Reserve Bank of Boston

02/24/2021 | News release | Distributed by Public on 02/24/2021 14:33

Boston Fed’s digital dollar research project honors 2 Hamiltons, Alexander and Margaret

Boston Fed's digital dollar research project honors 2 Hamiltons, Alexander and Margaret

"Project Hamilton" a call for boldness, ingenuity in pursuit of U.S.-backed digital currency

Steve Osemwenkhae/Federal Reserve Bank of Boston

ByJim S. Cunha

February 25, 2021

Last summer, the Federal Reserve and Massachusetts Institute of Technology's Digital Currency Initiativeannounced a joint explorationinto the use of existing and new technologies to build and test a hypothetical digital currency platform.

The Fed team decided to call this initiative "Project Hamilton," and it would be a reasonable guess that the name is a tip-of-the-hat to Alexander Hamilton, the Founding Father who laid the foundation of the Federal Reserve. It is, but it's more than that, and Alexander isn't the only Hamilton being honored here.

In our team's early discussions about the challenge of launching digital currency research, we studied great U.S. technological leaps, especially the people behind them. We knew the development of a digital currency would be a "moon shot" of sorts, so it was natural to study the Apollo Mission. A software developer from MIT came quickly into focus, and her name was Margaret Hamilton. She was the computer scientist who led the team that developed the software for the Apollo program's guidance system.

We also studied other giants of U.S. technological history - Robert Oppenheimer, Vinton Cerf, and Robert Kahn are a few - but Margaret Hamilton was unique. She placed a man on the moon while women were still fighting for basic civil rights. She also shared a surname with an important historical Fed figure, whose eponymous musical was playing on the AirPods of the project director, Bob Bench, when inspiration for the name struck.

So the name is a tribute to both Alexander and Margaret. But these two Hamiltons share more than a name. They share a boldness, ingenuity, and persistence that must be in Project Hamilton's DNA for it to succeed.

The two Hamiltons were audacious and relentless

Alexander Hamilton was just 24 when he firstproposed a national bankin 1779. The proposal didn't catch fire. But Hamilton reintroduced the idea in 1790, after President Washington appointed him Treasury secretary and overseer of a shattered post-war economy.

Hamilton argued a national bank was critical to enable commerce and create a stable currency, but opposition was fierce. Fellow founder Thomas Jefferson claimed the federal government had no Constitutional right to create the bank, and Washington came to agree.

Hamilton responded with a 15,000-word treatise that argued Congress was empowered to create the bank under what became known as the implied powers doctrine. Washington was persuaded and signed the act that created the bank in 1791. But the political battle left scars, and the bank was dissolved two decades later. Hamilton's ideas didn't die, though. They were fundamental to elements of The Federal Reserve Act of 1913, which created the modern-day Fed.

Margaret Hamilton was also in her 20s when sheseized a chance to make history. Hamilton was headed for grad school and a degree in abstract math but changed plans when she heard that MIT was looking for programmers to help send a man to the moon. Hamilton was the first programmer hired for the Apollo project at MIT, and by 1965 she was leading her own team.

Her group was dedicated to writing software for computers on the command module, Columbia, as well as the lunar module, Eagle, which took the crew to the moon.

At the time, programmers had to feed paper punch cards into hulking computers with no screens. Hamilton knew their limitations were irrelevant: "There was no second chance," she said.

The team's biggest test came when the Eagle's computers began flashing warning messages as it approached the moon's surface. But Mission Control told the astronauts to proceed, the software did its job, and the Eagle landed. The achievement helped earn Hamilton the Medal of Freedom in 2016 from President Obama, who remarked that "her example speaks of the American spirit of discovery."

We share the same spirit of discovery and urgency

Project Hamilton shares that spirit of discovery - and urgency - with the Hamiltons we honor. Discovery is, in fact, the key driver of the initiative. Our task is to inform policymakers by building a hypothetical platform that's fast, resilient, secure, and private enough to support a U.S.-backed central bank digital currency. Concurrent with our work with MIT, the Fed is looking at available public and private technology options, as well. Most great discoveries balance the best of these worlds.

It's a monumental challenge and opportunity. We aren't putting a man on the moon, and no decision has been made to move to production, but the work is exciting and important. I believe when Project Hamilton's work is done, we'll feel a lot like Margaret Hamilton did during this moment of reflection:

"Looking back, we were the luckiest people in the world," she said. "There was no choice but to be pioneers."