With the world moving towards digital payments, central banks have been looking into supporting the digitization pool. One solution that is already been trialed by China’s central bank is the use of a Central Bank Digital Currency (CBDC). It is estimated that around 80 percent of central banks are working on some kind of CBDC. The statistics also show that around 40 percent of all central banks have moved into the experimentation phase.
Mastercard’s CBDC Testing Platform
In recognition of the push for CBDCs, Mastercard revealed on September 9, 2020, that they had launched a testing platform for CBDCs. With the platform, central banks will be able to simulate the issuance of a CBDC between consumers, banks, and financial services providers.
Mastercard is inviting central banks, tech firms, advisory firms, and commercial banks to partners with Mastercard in assessing and testing CBDC tech design. Participants will be able to validate various use cases and evaluate their interoperability with existing payment rails.
Why Mastercard Launched the Platform
According to the announcement, Mastercard is a leader when into comes to operating multiple payment rails and bringing players together to ensure a level playing field. The company wants to harness its expertise in the digital payments sector to enable safe, practical, and secure development of CBDCs.
While commenting on the issue, Raj Dhamodharan, an Executive VP at Mastercard, said that central banks were accelerating their exploration of digital currencies. He noted that these banks had varying objectives. He added that Mastercard was driving innovation with various players in the exploration of CBDCs. The VP said that the new platform would support central banks as they made decisions about the present and the future for regional and local economies.
The Capabilities of the Platform
The new platform that has been created by Mastercard will come with a lot of functionality. For instance, it will; simulate the issuance of a CBDC, demonstrate the use of a CBDC by consumers to pay for services and goods, test various technologies and use cases, and much more.
There is no doubt that many banks are interested in a CBDC. However, due to varying technological capabilities, some of them might have been forced to shelve their plans. The Mastercard testing platform could help to change all that and ensure a level playing field for everyone.