Digital Assets: Mastercard Creates Platform For Simulating a CBDC Ecosystem

September 10, 2020 | Digital Assets, FinTech, News

Mastercard is inviting central banks, commercial banks, and tech and advisory firms for the evaluation of CBDCs.

Mastercard (NYSE: MA) is racing to gain a headstart in what may be the next step in the evolution of global money – the conversion of paper currencies to a central bank digital currency (CBDC).

Central banks have started to accelerate their evaluation of the feasibility of digital currencies, particularly as the global economy is rapidly adopting digital payments.

Robust technical architecture, financial inclusion, and modernizing the payments ecosystem, are some of the concerns which are at the top of their minds. Importantly, the transition has to be made while maintaining monetary policy and financial stability.

As central banks navigate the feasibility of their CBDC projects through uncharted territory, Mastercard has unveiled a proprietary virtual testing environment for them to evaluate CBDC use cases. (Mastercard)

CBDC simulation platform

Mastercard’s virtual and custom testing platform allows central banks to test rollout strategies for CBDCs by simulating a CBDC ecosystem.

This could be a boon because 80% of central banks have already embarked on initial work relating to CBDCs, according to the Bank for International Settlements. Further, 40% have advanced from concepts to experimentation.

It wants to harness its expertise to enable the practical, safe, and secure development of digital currencies, Mastercard said in a statement.

The new platform would enable central banks to:

  • assess various CBDC tech designs
  • validate use cases
  • evaluate interoperability with existing payment rails
  • simulate the insurance, distribution, and exchange of CBDCs between banks, financial service providers, and consumers
  • demonstrate how a CBDC can be used by a consumer to pay for goods and services anywhere Mastercard is accepted around the world.
  • evaluate the developmental progress including the technical build, security, and testing of the design and operations

“This new platform supports central banks as they make decisions now and in the future about the path forward for local and regional economies,” said Raj Dhamodharan, Executive Vice President, Digital Asset and Blockchain Products and Partnerships, Mastercard.

CBDCs coming in 2030

Meanwhile, according to a report from Dutch fintech-focused nonprofit think tank dGen, three to five nations across the world will do away with their fiat currency by 2030, replacing it with a central bank digital currency.

The report did not name the nations. However, it appreciated the progress made by Sweden, the Bahamas, and China’s digital yuan project.

Related Story:    NPP, A Blockchain Solution for Governments Considering a CBDC

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