CBDC | Mastercard launches a sandbox platform to assist countries in testing and issuing central bank digital currencies.

As the COVID-19 pandemic begins to ease, discussions surrounding Central Bank Digital Currencies (CBDC) seem to be decreasing worldwide. However, there is new progress from another financial giant as Mastercard announces the launch of a CBDC testing platform that will assist central banks in simulating the operational mechanisms of CBDCs.

Customizing the Simulation of CBDC Operational Mechanism

As digital payments become more prevalent worldwide, central banks of various countries are actively researching how to transition to digital currencies while maintaining currency and financial policy stability in issuance and distribution. A report from the Bank for International Settlements in January this year indicated that about 80% of surveyed central banks are involved in CBDC-related research, with approximately 40% actively engaged in development and design work.

Therefore, Mastercard announced the launch of its proprietary virtual testing environment. According to the announcement released on the 9th, this customized testing platform allows central banks and financial service providers to simulate a CBDC ecosystem to evaluate the practical use cases of CBDC and its applicability in specific countries or regions. The main functions include:

• Simulating issuance, distribution, and transaction systems
• How CBDC interfaces with existing payment infrastructures
• Assessing CBDC security, design, and initial operational testing
• Examining various CBDC technology design frameworks and use cases to evaluate feasibility

Raj Dhamodharan, Executive Vice President of Digital Asset and Blockchain at the company, stated in a press release:

Central banks around the world are accelerating their exploration of digital currencies, from promoting financial inclusion to modernizing payment ecosystems. Our new platform will support central banks in making the right decisions for the development of specific national or regional economies, both now and in the future.

Financial Giants Successively Investing in CBDC

Not only Mastercard, in May this year, Visa also applied for a patent for a digital fiat currency issuance named "DIGITAL FIAT CURRENCY," which can record the circulation of national fiat currencies on the blockchain and transform them into digital currencies. The central processing unit can receive any fiat currency issued by central banks, convert it into digital currency based on its serial number and denomination, and record the removal of the original circulating fiat currency on the blockchain.

In addition, although former Governor of the People's Bank of China, Yi Gang, once stated in an interview that "there is no specific timetable for the launch of digital renminbi," the development progress of China's digital currency DCEP seems to be very close to implementation.

While CBDCs may seem unrelated to cryptocurrencies like Bitcoin, Grayscale Investments, a crypto investment firm, pointed out that CBDCs will "enhance the value proposition of Bitcoin and other digital currencies." The widespread adoption of CBDCs will naturally compel the public and institutions to become familiar with digital payment infrastructure.

On the other hand, the public will also discover the differences between Bitcoin and CBDCs, which will serve as a bridge for further understanding Bitcoin.