Global: Mastercard Achieves Breakthrough in CBDC Interoperability with Successful Pilot Program

Mastercard, the world’s second-largest payment processing corporation, has proudly announced the successful completion of a pilot program designed to tokenize central bank digital currencies (CBDC) on various blockchains. This achievement paves the way for consumers to engage in cross-blockchain commerce with enhanced security and ease.

The groundbreaking solution was developed as part of a research initiative led by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Center (DFCRC). This collaborative effort explores potential use cases for a CBDC in Australia.

The project involved the issuance of a limited-scale pilot CBDC by the RBA, representing a genuine legal claim on the RBA. This pilot CBDC was utilized by selected industry participants to demonstrate the innovative payment and settlement services that a CBDC could offer to Australian households and businesses.

The newly developed platform includes stringent controls to ensure that the pilot CBDC can solely be held, utilized, and redeemed by authorized entities that have undergone Know Your Customer (KYC) verification and have been assessed for risk by licensed service providers.

Richard Wormald, the Division President of Australasia at Mastercard, noted, “As the digital economy continues to mature, Mastercard has seen demand from consumers to participate in commerce across multiple blockchains, including public blockchains. This technology not only has the potential to drive more consumer choice but also unlocks new opportunities for collaboration between public and private networks to drive genuine impact in the digital currency space.”

In the course of the pilot program, Mastercard conducted a live demonstration illustrating how the solution allowed a pilot CBDC to be used for purchasing a non-fungible token (NFT) listed on the Ethereum network. This process involved “locking” the required amount of the pilot CBDC on the RBA’s pilot CBDC platform and minting an equivalent amount of wrapped pilot CBDC tokens on the Ethereum blockchain.

Before finalizing the transaction, the Ethereum wallets of the buyer, seller, and the NFT marketplace smart contract had to be “allow-listed” within the platform. The release highlighted that “with all other transfers of the wrapped pilot CBDC blocked, it successfully demonstrated the platform’s ability to implement controls – even on public blockchains.”

The pilot program leveraged Mastercard’s Multi-Token Network, a solution introduced by the company in June. This solution is designed to enhance interoperability within the blockchain ecosystem and facilitate more efficient payment and commerce applications using blockchain technology.

Mastercard explained that the Multi-Token Network is currently in beta and is a pivotal component of the company’s broader strategy to expand blockchain technology usage across various payment use cases. It allows regulated entities to harness the functionality of digital assets and is currently undergoing pilot testing with select financial institutions around the world.

The Division President of Australasia, Richard Wormald, emphasized, “As demonstrated in this project, the solutions that play a key role in Multi-Token Network have the potential to enable new levels of interoperability between blockchains, in a safe and secure manner. By enabling people to easily move digital currencies on-demand, via Mastercard’s trusted network, more consumers could participate in crypto ecosystems using reputable and reliable forms of money, while enjoying the benefits that these currencies offer, such as programmability, transparency, and compliance.”