Mastercard launches platform to test central bank digital currencies

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The payments specialist Mastercard wants to help central banks tackle issues related to digital currencies, and is launching an environment to simulate the issuance, distribution and exchange of these currencies.

Mastercard announced on September 9 the launch of a platform for testing central bank digital currencies (CBDCs). This virtual test environment, exclusively dedicated to central banks, will simulate the issuance, distribution and exchange of these currencies between banks, financial service providers and users.

Test exchanges between banks and users

Concretely, this platform will allow the various partners to test a dedicated ecosystem, to implement these currencies in existing payment networks and infrastructures, such as payment cards for example, to test these payment methods in real time “wherever Mastercard is available. accepted worldwide “, or to compare different technologies to more quickly determine value and feasibility in a market.

In a global context marked by the decrease in cash in circulation and the rise of digital payments – with unprecedented peaks since the start of the Covid-19 pandemic – central banks are seriously considering the issue of digital currencies. According to a Bank for International Settlements study cited by Mastecard, 80% of central banks say they have started work on CBDCs, and about 40% of them have moved from conceptual research to concept experimentation and development creation.

This reality is pushing the players in the fintech ecosystem, including Mastercard, to offer relevant solutions with the guarantee of working with the players at the heart of monetary policies. “Mastercard wishes to use its expertise to serve the practical, safe and secure development of digital currencies,” summarizes the company based in Purchase, New York.

Validate use cases

Unlike Libra or Bitcoin-type private digital currency projects, CBDCs are issued and distributed by central banks and designed to be subject to applicable regulations. They are backed in value by circulating currencies and can be viewed as virtual representations of a country’s fiat currency. A path that Facebook’s cryptocurrency has forcibly adopted so as not to fall into the water. Mastercard was, as a reminder, one of the first companies to withdraw from this highly controversial project.

This approach, which can be found in the Chinese and Swedish initiatives, nevertheless involves national specificities. To respect them, Mastercard explains that it has developed a virtual platform that can be personalized according to the environment in which the central bank operates. The American company invites “central banks, commercial banks and technology and consultancy companies to partner with Mastercard” to evaluate the technological designs of CBDCs, validate use cases and measure interoperability with the circuits of existing payments.

Note that the European Central Bank (ECB) does not see, according to statements from last June, any “business case” that would justify the launch of its own digital currency.

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