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Leading global payment and technology firm Mastercard has announced plans to explore smart contract technology on Central Bank Digital Currencies (CBDCs).
MasterCard Investing in Smart Contract Tech For CBDCs
Mastercard’s efforts in examining how smart contracts can help central banks develop digital cash is a push towards the realization of state-backed currencies. The announcement made during the company's Q1 earnings call revealed Mastercard's efforts in the crypto world by collaborating with governments in the development of CBDCs beyond mere payment options. Miebach said several central banks, including the European Central Bank and the Bank of England, plan the CBDC with a “two-step approach” in mind. The two-step approach is a system in which the central bank issues a CBDC, and private banks and payment companies provide it to users to develop related services. CBDCs continue to be a trending topic right now as central banks around the world are in various stages of research and development of digital currencies. CBDCs are digital versions of fiat currencies (like the euro, US dollar, or Japanese yen) backed by a central bank.MasterCard Contributing Its Quota To Crypto Industry
Before now, Mastercard had established a series of partnerships with governments on state-backed digital currencies. Last year, Mastercard launched a testing platform that allows central banks to evaluate digital currencies. The platform was developed to facilitate an environment where banks, fintech, and consumers can partner for the issuance, distribution, and exchange of digital currencies. Miebach had previously revealed the company's plans to focus on stablecoins and CBDC. Earlier in February, Mastercard collaborated with the Bahamas government, which provided the citizens with the option of loading the country’s CBDC onto a prepaid Mastercard. Besides CBDC issuance, MasterCard is pushing the crypto frontier. The payment network was one of the first firms to support cryptocurrencies on its payment network. Its rival, VISA, is not left behind as the company has also been making supportive moves in the crypto industry. VISA's crypto payment boss Guy Sheffield believes the CBDC path could affect the global adoption of crypto as a whole. He explained on Twitter,“As governments evaluate CBDC, the path that they decide to take will have major implications for privacy, monetary sovereignty, geopolitics, and financial inclusion, as well as global adoption of crypto dollars and bitcoin.”