Mastercard: Consumer Comfort with Current Money Hinders CBDC Adoption

• Central Bank Digital Currencies: Necessity or Not?
• Adoption Challenges of CBDCs
• Mastercard's CBDC Partner Program
• Global Interest in CBDCs
• Doubts about the Effort
• Mastercard's CBDC Pilot in Hong Kong
• Further Reading

Central Bank Digital Currencies: Necessity or Not?

There seems to be no compelling reason to adopt central bank digital currencies (CBDCs) given the ease of using traditional money, according to the Head of Blockchain and Digital Assets for Asia-Pacific at Mastercard, as reported by CNBC. The main challenge, it appears, lies in achieving widespread adoption of such digital currencies.

Adoption Challenges of CBDCs

The challenge is adoption, stated the Mastercard executive at the Singapore FinTech festival. He added, If CBDCs were an option in your wallet, you should be able to spend it wherever you desire - an experience akin to that of using cash today.

Mastercard's CBDC Partner Program

Mastercard has initiated a CBDC Partner Program, involving participants such as Ripple, Fireblocks, and Consensys. The initiative was set up to incite discussions amidst key industry players but was also viewed as a means for Mastercard to intensify its engagement with CBDC developments. This comes as an increasing number of countries explore the potential of this technology.

Global Interest in CBDCs

An estimated 130 countries, accounting for 98% of the world's gross domestic product, are considering a CBDC according to the Atlantic Council. A stark rise from May 2020, when only 35 countries were contemplating the idea. To date, however, only 11 countries have launched a digital currency.

Doubts about the Effort

For now, the necessity of a digital currency is challenging to substantiate, as stated by the Mastercard executive. He adds that to build the required infrastructure for such an initiative takes a significant amount of time and effort.

Mastercard's CBDC Pilot in Hong Kong

Last week, Mastercard concluded a CBDC Pilot in Hong Kong, aiming to demonstrate how CBDCs or tokenized deposits can be applied to real-world asset transactions. The pilot also highlighted the potential for smooth funding and settlement in and out of Web3 marketplaces using a retail central bank digital currency.

Further Reading

Find more on this: Mastercard Deepens Tie to CBDCs as Nations Mull Issuing Digital Currencies.

Edited by Jonathan Stoker