Central bank digital currencies get a testing platform built by MasterCard
By Bob Garcia
The prospects for established digital currencies as an alternative to fiat are becoming more realistic
Giant payment company MasterCard continues to adapt to the trends imposed by the cryptocurrency industry and announced on Wednesday the launch of its “proprietary virtual testing environment” that can be used by central banks. This platform allows financial institutions to evaluate the use cases for their central bank digital currencies (CBDC), and is an example of how far digital currency has come in a very short time. It took the US dollar over 100 years to be accepted internationally and, within just a few short years, crypto is already making a stand as an alternative to fiat.
“The platform enables the simulation of issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers,” said the press release issued by MasterCard. “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,” the announcement continues.
MasterCard noted that, based on research conducted by the Bank of International Settlement (BIS), around 80% of central banks are researching CBDCs and 40% of them are already in the middle of the experimental stage. This served as one reason for the company to develop this platform as a useful tool for central banks. While MasterCard didn’t indicate the level of interest it has received, the fact that there are at least 11 countries considering launching, or already launching, a CBDC, there shouldn’t be a shortage of participation.
“Central banks have accelerated their exploration of digital currencies with a variety of objectives, from fostering financial inclusion to modernizing the payments ecosystem,” Raj Dhamodharan, MasterCard’s Executive Vice President of Digital Asset and Blockchain Products and Partnerships, said. “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 believes that having private firms collaborating with central banks would help them to better understand all the possibilities and capabilities that CBDCs can offer.