Mastercard unveils central bank digital currencies testing platform

Bank And Digital Inclusion

New sandbox designed to simulate how digital currencies would work in the real world

MASTERCARD announced September 9 the launch of a central bank digital currencies (CBDCs) testing platform to enable central banks to assess and explore national digital currencies. The platform enables the simulation of issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers.

The testing tool comes as the global economy embraces digital payments and central banks investigate how to support innovation while maintaining monetary policy and financial stability as they issue and distribute currency.

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

To that end, central banks, commercial banks, and tech and advisory firms are invited to partner with the payments giant to assess CBDCs tech designs, validate use cases and evaluate interoperability with the existing payment rails currently available for consumers and businesses.

“Central banks have accelerated their exploration of digital currencies with a variety of objectives, from fostering financial inclusion to modernizing the payments ecosystem,” says Raj Dhamodharan, executive vice president, digital asset and blockchain products and partnerships, Mastercard. “This new platform supports central banks as they make decisions now and in the future about the path forward for local and regional economies.”

Sheila Warren, head of blockchain at the World Economic Forum, the Swiss-based trade group, says collaborations between the public and private sectors in the exploration of CBDCs can help central banks understand the range of possibilities.

“Central banks can benefit from support in exploring the option set available to them with respect to CBDCs, as well as gaining insight into what opportunities may be forthcoming,” she adds.

While a variety of potential operating models exist, the primary approach sees central banks issuing and distributing currency, including digital currencies, through commercial banks and other licensed payments providers.