Mastercard has taken another step in the Web3 space, launching a CBDC-centric forum. Its aim is to provide a platform for cryptocurrency participants to initiate discussions around the emergence of central bank digital currencies (CBDCs), which have begun to emerge in different parts of the world. A CBDC is a digital representation of fiat currencies like the dollar and rupee, backed by blockchain. Several countries, including India, are already working on their own CBDCs, hoping to improve the transparency of financial records.
Cryptocurrency-related companies Ripple, Consensys, Fluency, Idemia, Consult Hyperion and Fireblocks have been included by Mastercard as initial members of its CBDC partnership program.
According to Mastercard’s Raj Dhamodharan, people must have multiple payment options that interoperate. Dhamodharan serves as the company’s head of digital assets and blockchain.
“As we look to a digitally driven future, it is critical that the value held by a CBDC be as accessible as other forms of money. We believe payment options, and interoperability between different payment methods, are essential to a thriving economy important component,” Dhamodharan said.
Mastercard further added in its blog that 93% of central banks are currently working on some form of CBDC. Given this situation, discussions among cryptocurrency players can help central banks avoid mistakes and loopholes.
“Central banks need to consider a number of issues. This includes the role of the private sector in CBDC issuance, security, privacy and interoperability, such as how a CBDC would work with other commonly used payment mechanisms, what specific challenges a CBDC would solve and whether they are a good fit for this project.” tools for the job,” said Jesse McWaters, Mastercard’s head of global regulatory advocacy.
Through this CBDC Partner Program, Mastercard hopes to gain more understanding of the safe and useful deployment of CBDCs through feedback from industry participants.
“If not implemented properly, a CBDC could disrupt existing payment systems and crowd out private sector investment,” the blog added.
A CBDC functions like a cryptocurrency, but instead of being unregulated and volatile, a CBDC is regulated and issued by a central bank. A CBDC would not only maintain an immutable and transparent record of online payments, but also reduce reliance on cash notes.
A recent survey on CBDCs by the CFA Institute stated that developing markets such as India and China are more receptive to CBDCs. The survey further noted that 42% of global respondents support central banks issuing CBDCs.
Due to the rise of the CBDC craze, the International Monetary Fund (IMF) also stated that it began developing a platform as early as June to enable CBDC transactions between countries.
The IMF’s goal is for central banks to create a common regulatory framework for digital currencies to achieve global interoperability. IMF Managing Director Kristalina Georgieva said at the time that failure to agree on a common platform would create a vacuum that could be filled by cryptocurrencies.