MANILA, Philippines — Mastercard has launched a testing platform for digital currencies to allow central banks to evaluate the suitability of central bank digital currencies (CBDC) in a country or a region.
Raj Dhamodharan, executive vice president for digital asset and blockchain products and partnerships at Mastercard, said central banks have accelerated their exploration of digital currencies with a variety of objectives from fostering financial inclusion to modernizing the payments ecosystem.
“Mastercard is driving innovation with the public sector, banks, fintech and advisory firms in the exploration of CBDCs, working with partners that are aligned to our core values and principles. This new platform supports central banks as they make decisions now and in the future about the path forward for local and regional economies,” Dhamodharan said.
With the global economy racing to embrace digital payments, central banks also are looking to the future and investigating how to support innovation while maintaining monetary policy and financial stability as they issue and distribute currency.
A recent survey by the Bank for International Settlements (BIS) showed that 80 percent of central banks surveyed are engaging in some form of CBDCs work, while about 40 percent of central banks have progressed from conceptual research to experimenting with concept and design.
In the Philippines, the Bangko Sentral ng Pilipinas (BSP) is exploring the creation of its own digital currency amid the sharp growth in online transactions amid the COVID-19 pandemic.
BSP Governor Benjamin Diokno earlier tasked a technical working group to study the feasibility and policy implications of issuing its own digital currency.
Sheila Warren, head of blockchain, digital assets and data policy at the World Economic Forum, said collaborations between the public and private sectors in the exploration of CBDCs could help central banks better understand the range of technology possibilities and capabilities available with respect to digital currencies.
“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,” Warren said.
CBDCs are designed to be equivalent in value to a nation’s paper currency and subject to the same government-backed guarantees. In addition to printing money, central banks can issue CBDCs as a digital representation of a country’s fiat currency.
The platform enables the simulation of issuance, distribution and exchange of CBDCs between banks, financial service providers and consumers.
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.
Mastercard is committed to supporting central banks in their chosen path to modernize payments as they look for solutions that seamlessly integrate with existing ways to pay.