Victor Ugochukwu · Oct 26, 2020 . 5min read
Mastercard Introduces CBDC Testing Platform to Promote Digital Payments
Mastercard introduces CBDC's testing platform that will enable central banks to assess and explore national digital currencies.
By Komal Joshi · Sep 10, 2020 . 5min read
Mastercard announced today that it is launching a proprietary virtual testing environment for central banks to assess CBDC use cases and test roll-out strategies. Initially, CBDC’s are similar in value to a nation’s paper currency. It is subject to the same government-backed guarantees. In addition to printing money, central banks can issue CBDC’s like a digital representation of a country’s fiat currency. Keeping this in mind, the testing tool comes as the global economy welcomes digital payments. Additionally, central banks are now investigating how to promote innovation while preserving financial stability as they issue the currency.
Mastercard is a leader in conducting multiple payment rails and convoking associates to assure equal opportunity for everyone. It plans to offer opportunities to banks, businesses, mobile network operators. Additionally, it plans to bring the maximum people into the digital economy. Mastercard aspires to utilize its expertise to facilitate practical, safe, and secure digital currencies development.
How Does Virtual CBDC Testing Tool Functions
The platform facilitates the simulation of issuance, distribution, and exchange of CBDC’s between banks, financial service providers, and consumers. Central banks, commercial banks, tech and advisory firms are encouraged to associate with Mastercard to assess CBDC tech designs, validate use cases and evaluate interoperability with existing payment rails accessible for customers and businesses today. However, it can also demonstrate CBDC’s usage to pay for goods and services at Mastercard acceptance points globally.
Mastercard was one of the founding members of Facebook’s Libra Association. It is an initiative now considered as a catalyst for getting central banks to look at digital currencies seriously. Additionally, along with rival Visa, Mastercard left Libra in October after mounting concerns over compliance and the business model.
Earlier, Mastercard Asia Pacific filed a patent for a transparent billing system based on IOTA’s Tangle. It is titled “Method and System for Device Micropayment Aggregation based on Tangle Network”. However, the patent claim proposes a pay-as-you-go system. It makes usage of a “clear information storage system and aggregation.”
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