Central banks have been exploring ways to issue their own digital currencies for years, writes Mastercard. Yet their efforts haven’t captured the public’s attention — for better or, more recently, for worse — like cryptocurrencies have. But central bank digital currencies, or CBDCs — essentially a digital version of fiat currency backed by a government and therefore far less speculative than crypto — are gaining momentum, with the potential to have an even bigger impact on our everyday lives.

Central banks around the world are experimenting with issuing these digital currencies to complement traditional payments, both the physical version in your wallet and the online version in your banking app. In fact, 93% of central banks are engaged in some form of work on CBDCs, and four retail CBDCs are already in full live circulation, according to the Bank for International Settlements.

But there are many questions that central banks need to consider, says Jesse McWaters, who leads global regulatory advocacy at Mastercard. This includes the role of the private sector in CBDC issuance, security, privacy and interoperability — such as how a CBDC works with other commonly used payment mechanisms, what specific challenges CBDCs would solve and whether they’re even the right tool for the job.

To bring a greater understanding of the benefits and limitations of CBDCs and how to implement them in a way that is safe, seamless and useful, Mastercard is convening a group of leading blockchain technology and payment service providers to join its new CBDC Partner Program. It’s designed to foster collaboration with key players in the space so they can drive innovation and efficiencies, says Raj Dhamodharan, head of digital assets and blockchain at Mastercard.

The inaugural set of partners includes CBDC platform Ripple, blockchain and Web3 software company Consensys, multi-CBDC and tokenized assets solution provider Fluency, digital identity technology provider Idemia, digital identity consultant Consult Hyperion, security technology group Giesecke+Devrient and digital asset operations platform Fireblocks.

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June 2024