Mastercard launches a CBDC Partner Program with seven leading crypto and blockchain companies, including Ripple, ConsenSys, and Fireblocks, to explore the benefits and challenges of digital currencies.
Mastercard, one of the world’s largest payment-processing companies, has launched a new initiative to explore the benefits and challenges of central bank digital currencies (CBDCs) with seven prominent crypto and blockchain firms, as it announced on Aug. 17.
CBDCs are digital versions of fiat currencies issued and regulated by central banks.
According to the Bank for International Settlements (BIS), 93% of the world’s central banks are working on CBDCs, but their efforts have not captured the public’s attention as much as cryptocurrencies have.
However, Mastercard believes that CBDCs have the potential to have an even bigger impact on our everyday lives.
The CBDC Partner Program and Pilot Projects
To address the questions and opportunities that CBDCs present, Mastercard has formed a CBDC Partner Program with leading blockchain technology and payment service providers “to foster collaboration with key players in the space so they can drive innovation and efficiencies.”
The seven initial partners joining Mastercard in the program are:- Ripple, Consensys, Fluency, Idemia, Consult Hyperion, Giesecke+Devrient, and Fireblocks
As part of the CBDC Partner Program, Mastercard and its partners will work on various pilot projects to test and demonstrate the feasibility and functionality of CBDCs.
Some of the pilot projects that have already been launched or announced are:
- Fluency has worked on building interoperability among different CBDCs using its Fluency Network Protocol (FNP), which allows a seamless exchange of value across different blockchains and networks.
- Consult Hyperion has worked with central banks and payment processors to define their CBDC requirements and design their CBDC systems using its Digital Fiat Currency (DFC) framework, which provides a modular approach to CBDC implementation.
- Ripple has launched an inaugural government-issued national stablecoin in collaboration with the Republic of Palau, in addition to working on four CBDC pilots using its RippleNet platform, which leverages the XRP Ledger (XRPL), a carbon-neutral blockchain that supports fast and low-cost transactions.
Mastercard said that CBDCs offer numerous advantages to different stakeholders in the economy, such as:
- Consumers: CBDCs can enable more people to access financial services, pay lower fees for transactions, settle payments faster, and choose from more payment options.
- Merchants: CBDCs can help businesses reduce their operational costs, increase their sales volumes, and improve their customer loyalty.
- Governments: CBDCs can help authorities improve their monetary policy effectiveness, increase their transparency and compliance, and foster their economic growth.
The Prospects for CBDCs
Mastercard further stated that it believes in payment choice and interoperability across different payment methods.
“As we look ahead toward a digitally driven future, it will be essential that the value held as a CBDC is as easy to use as other forms of money,”
Raj Dhamodharan, head of digital assets and blockchain at Mastercard.
Mastercard also invited more crypto companies to join its CBDC Partner Program and contribute to the development of CBDCs.
“We welcome any organization interested in advancing this important work to join us,” Dhamodharan said.
