Mastercard has launched a central bank digital currency testing platform for Central Banks to enable them conduct pilot tests for Central Bank Digital Currencies.
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Mastercard notes that a survey conducted by the Bank for International Settlements confirms that 80 percent of central banks are engaged in some form of Central Bank Digital Currencies (CBDCs) work.
Among these 80 percent, 40 percent have progressed from conceptual research to experimenting with concept and design. Banks like the Reserve Bank of China have made some outstanding progress in this area.
Over four countries in Africa are reportedly testing the creation of Central Bank Digital Currencies across Africa. These countries include:
The new mastercard cbdc testing platform will streamline the issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers.
“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, Digital Asset and Blockchain Products and Partnerships, Mastercard.
The test environment can be individually designed to align with how a central bank operates, allowing them 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 – e.g., cards and real time payments.
- 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.
Quick Facts: CBDCs are designed to be equivalent (1:1) in value to a country’s paper currency and is subject to the same government-backed guarantees. In the case of Naira, a CBDC from Central Bank of Nigeria will be 1:1 to Naira. CBDCs are issued as a digital representation of a country’s fiat currency.