Mastercard announced a virtual testing platform for central banks to evaluate CBDC use cases. The platform is set to help central banks assess and explore national digital currencies.
Around the world, central banks are opening up to the idea of creating their digital currencies. A recent survey carried out by the Bank for International Settlements revealed that 80% of central banks are working in some way on CBDCs. In comparison, 40% moved beyond conceptual research to experimentation.
CBDC Customizable Services
There is a world’s hype to adopt digital payment methods. Central banks explore digital currencies and investigate ways to support innovation while maintaining monetary policy and financial stability. Mastercard understands that every central bank differs in its CBDC exploration; hence, looking into providing a solution to each of them.
The virtual platform will be customizable to the environment the central bank operates. It allows the central bank to simulate a CBDC issuance, distribution, and exchange ecosystem with banks and consumers. It evaluates CBDC development efforts, including the security and technical build.
The platform also examines various CBDC technology designs and uses cases to determine value and feasibility. Lastly, it can demonstrate CBDC use by consumers to pay for goods and services in places accepting Mastercard.
CBDCs are designed to be of equivalent value to the nation’s fiat currency and subject to the same government-backed guarantees. Rather than printing money, central banks can issue CBDCs as a digital representation of that country’s currency
Mastercard Working With Partners to Explore CBDCs
Mastercard invited Central banks, commercial banks, and tech & advisory firms to partner with them. Sheila Warren, Head of Blockchain, Digital Assets and Data Policy at the World Economic Forum, said that the partnership is beneficial to central banks as they know the upcoming technology available for CBDCs. Central banks can benefit by exploring the options set available to them concerning CBDCs and gaining insight into future opportunities.
Raj Dhamodharan, Executive Vice President, mastercard, said that due to central banks’ accelerated exploration of digital currencies, mastercard hopes to help make decisions now and in the future about local and regional economies. Mastercard’s driving force is to work with partners that align with their core values and principles in exploring CBDCs.
As decentralized services continue to take over, mastercard commits to supporting central banks in adopting digital payments; that is, as they look for solutions that seamlessly integrate with existing ways to pay. The company looks to partner with both public and private sectors to digitalize the way people and businesses transact.