Mastercard launches CBDC testing platform

Payments giant says it will enable central banks to assess and explore national digital currencies

Mastercard launches CBDC testing platform
Photo: iStock

Mastercard has launched a central bank digital currencies (CBDCs) testing platform to enable central banks to assess and explore national digital currencies. 

The move is seen as positive for crypto because it could help to accelerate the mainstream adoption of digital currencies in general.

Led by China, which is testing a digital version of the yuan, central banks around the world are embracing the idea of creating their own digital currencies. 

According to a recent survey conducted by the Bank for International Settlements, 80% of central banks are working on developing CBDCs and 40% have graduated from conceptual research to experimentation.

In a statement, Mastercard said the new protocol would help financial institutions understand the feasibility of CBDCs and allow them to explore new use cases, including issuance at a local or regional level. The payments giant has publicly stated that it is already working with some central banks and that other entities, such as banks or tech firms, are being invited to use the platform.

Konstantin Richter, CEO of Blockdaemon, responded positively to the news, saying, “The development of Mastercard’s testing platform presents a significant opportunity for newcomers to the crypto space, by lowering the barrier to entry for users interested in getting involved in digital money. Projects driven by large institutions enable users to experiment, while providing a higher barometer of trust due to the institutional backing of such initiatives.

“This move also offers advantages for the advancement of digital currency research in a controlled environment. Overall, Mastercard’s testing platform complements private stablecoin projects, such as Libra, as it not only propels forward wider adoption, but also bridges the gap to new and better ways of doing business for the future of finance.”

Nicholas Pelecanos, head of trading at NEM, thinks the new platform “makes sense and is forward-thinking.” He said, “As society moves away from cash, CBDCs seem to make more and more sense. China is currently pressing forward with its own centralized CBDC and recently the Lithuanian Central Bank issued the first CBDC using the decentralized NEM blockchain. 

“The move from Mastercard to provide a sandbox for governments to test CBDCs makes sense and is forward-thinking from the payments giant, particularly as blockchain technology is currently revolutionising the currency and payments sector, as evidenced by major strides in the DeFi space.

He added, “While I predict that this move will prompt more governments to follow suit, what will be interesting is whether these currencies will be designed to respect our freedoms and rights, true to the original ethos of crypto, or whether they will be used as a means of asserting control and surveillance.”