Mastercard launches CBDC test platform

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Mastercard has launched a central bank digital currency (CBDC) test platform. 

“The platform enables the simulation of issuance, distribution, and exchange of CBDCs between banks, financial service providers, and consumers,” said Mastercard in an announcement. “Central banks, commercial banks, and tech and advisory firms are invited to partner with Mastercard to assess CBDC tech designs, validate use cases and evaluate interoperability with existing payment rails available for consumers and businesses today.”

If you can’t beat them, join them

Mastercard knows that digital currency and blockchain is the future of money. That being said, they decided to join the innovation-race and offer their own product that facilitates and catalyzes the launch of a CBDC.

According to the Bank for International Settlements, 80% of central banks surveyed are engaging in some form of CBDC work and about 40% of central banks have progressed from conceptual research to experimenting with concept and design.

“Central banks have accelerated their exploration of digital currencies with a variety of objectives, from fostering financial inclusion to modernizing the payments ecosystem,” said Raj Dhamodharan, Executive Vice President of Digital Asset and Blockchain Products and Partnerships at Mastercard. “Mastercard is driving innovation with the public sector, banks, fintechs, and advisory firms in the exploration of CBDCs, working with partners that are aligned to our core values and principles. This new platform supports central banks as they make decisions now and in the future about the path forward for local and regional economies.”

Mastercard’s CBDC test platform allows its users to:

• Simulate a CBDC issuance, distribution, and exchange ecosystem with banks and consumers, including how a CBDC can interface with existing payment networks and infrastructures.

• Demonstrate how a CBDC can be used by a consumer to pay for goods and services anywhere Mastercard is accepted around the world.

• Examine various CBDC technology designs and use cases to more quickly determine value and feasibility in a market.

• Evaluate CBDC development efforts including the technical build, security, and early testing of the design and operations.

Removing friction?

The Mastercard CBDC test platform will have a positive impact on the overall blockchain and digital currency industry—especially when it comes to CBDCs. Many countries around the world have been researching and developing a CBDC; however, when each country is doing their own thing, there is no guarantee that their final product will be compatible with the systems that others have built.

That being said, it looks like Mastercard is working to eliminate that friction, and giving all financial institutions around the world an interoperable platform that allows them to effectively launch and use a CBDC.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.