Global financial giants and the New York Fed are rolling out a digital dollar test run as crypto reels from FTX's crash

The digital dollar pilot program is being launched by some of the biggest players in the financial industry.

The Federal Reserve Bank of New York and about a dozen global giants, including Citigroup, HSBC, Mastercard and Wells Fargo, announced plans on Tuesday to test use of a digital token for a year.

The New York Fed has a list of other firms. The firms will use simulation data in a test environment. The banks will process the token through a bank simulation.

Tony McLaughlin, managing director for emerging payments and business development at Citigroup, said in a statement that "Programmable US dollars may be necessary to support new business models and provide a foundation to much-needed innovations in financial settlements and infrastructure." The projects that focus on the digitization of central bank money and individual bank deposits could be expanded to take a broader view of the opportunity.

Initially, the project will focus on digital dollars issued by institutions, but it could expand to include stable coins and multi currency operations.

The latest blow to the sector came last week when FTX filed for Chapter 11.

TerraUSD lost its peg to the US dollar and caused other stable coins to break the buck.