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Mastercard Unveils Testing Platform for Digital Currencies
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Mastercard Inc. (MA - Free Report) has launched a proprietary virtual platform for the testing of central bank digital currency (CBDC) use cases.
The platform enables the simulation of issuance, distribution and exchange of CBDCs among banks, financial service providers and consumers. Central banks, commercial banks, and tech and advisory firms are invited to partner with Mastercard to assess CBDC tech designs, validate use cases and evaluate interoperability with the existing payment rails available for consumers and businesses today.
This strategic move by Mastercard reflects its efforts to enable the practical, safe and secure development of digital currencies, which are gaining prominence as the global economy is moving toward digital payments.
This trend is prompting central banks to explore CBDCs and look for innovative ways to maintain monetary policy and financial stability as they issue and distribute currency. CBDCs are also going to be a catalyst for modernizing the payments ecosystem.
Mastercard will be assisting central banks to better understand the range of technology possibilities and capabilities available with respect to CBDCs.
According to a recent survey by the Bank for International Settlements, 80% of central banks surveyed is engaging in some form of CBDC work and about 40% progressed from conceptual research to experiment with the concept and design. This shows that banks are progressing in the direction of CBDCs, though the same is yet to come into actual use.
Just like paper currency and coins, CBDCwill be fixed in nominal terms and be universally accessible and valid as a legal tender for all public and private transactions.
The existing payment ecosystem uses physical cash, checks, card networks, real-time payments (account to account) or electronic transfer of money. CBDC is another innovative payment instrument that can co-exist with others. It has the advantage of lowering printing costs for governments and can also minimize the usage of cash.
A number of other compelling reasons make CBDC an attractive proposition for the central bankers.
CBDC enhances monitoring of financial activity and allows greater control and traceability compared to cryptocurrencies and cash. It could reduce the number of financial frauds, may mitigate counterfeiting and tax evasion attempts and generally drive the safety and stability of financial institutions.
As a practically costless medium of exchange, CBDC will improve the efficiency of the payments system. For example, per a recent IMF study, the introduction of CBDC will facilitate more rapid and secure settlement of cross-border financial transactions.
The adoption of CBDC becomes more pertinent as the payments system is continually expanding and evolving to include multiple traditional and non-traditional participants, acting as financial services providers.
China has been steadfast in its approach to CBDC and announced last year that it will soon replace its cash in circulation with a new digital currency. In July this year, The Bank of Japan announced that it was testing the tokenisation of the Japanese yen.
Mastercard is leading the charge and handholding central banks as they inch toward CBDC. These financial institutions will in turn, open up new business opportunities for the company as they look to tie up with payment networks for CBDC issuances.
Another company in the same space Visa Inc. (V - Free Report) has also been engaging with policy makers and global organizations to help shape the dialogue and understanding of digital currencies. This includes the payment facilitator’s work with the World Economic Forum and its collaboration on a set of policy recommendations for central banks exploring the concept of CBDC.
Year to date, the stock has rallied 20.8% compared with its industry’s growth of 10.9%.
Mastercard currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Evertec Inc. (EVTC - Free Report) and Green Dot Corporation (GDOT - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. Earnings of Evertec and Green Dot surpassed estimates in the last reported quarter by 18.75% and 38.71%, respectively.
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Mastercard Unveils Testing Platform for Digital Currencies
Mastercard Inc. (MA - Free Report) has launched a proprietary virtual platform for the testing of central bank digital currency (CBDC) use cases.
The platform enables the simulation of issuance, distribution and exchange of CBDCs among banks, financial service providers and consumers. Central banks, commercial banks, and tech and advisory firms are invited to partner with Mastercard to assess CBDC tech designs, validate use cases and evaluate interoperability with the existing payment rails available for consumers and businesses today.
This strategic move by Mastercard reflects its efforts to enable the practical, safe and secure development of digital currencies, which are gaining prominence as the global economy is moving toward digital payments.
This trend is prompting central banks to explore CBDCs and look for innovative ways to maintain monetary policy and financial stability as they issue and distribute currency. CBDCs are also going to be a catalyst for modernizing the payments ecosystem.
Mastercard will be assisting central banks to better understand the range of technology possibilities and capabilities available with respect to CBDCs.
According to a recent survey by the Bank for International Settlements, 80% of central banks surveyed is engaging in some form of CBDC work and about 40% progressed from conceptual research to experiment with the concept and design. This shows that banks are progressing in the direction of CBDCs, though the same is yet to come into actual use.
Just like paper currency and coins, CBDCwill be fixed in nominal terms and be universally accessible and valid as a legal tender for all public and private transactions.
The existing payment ecosystem uses physical cash, checks, card networks, real-time payments (account to account) or electronic transfer of money. CBDC is another innovative payment instrument that can co-exist with others. It has the advantage of lowering printing costs for governments and can also minimize the usage of cash.
A number of other compelling reasons make CBDC an attractive proposition for the central bankers.
CBDC enhances monitoring of financial activity and allows greater control and traceability compared to cryptocurrencies and cash. It could reduce the number of financial frauds, may mitigate counterfeiting and tax evasion attempts and generally drive the safety and stability of financial institutions.
As a practically costless medium of exchange, CBDC will improve the efficiency of the payments system. For example, per a recent IMF study, the introduction of CBDC will facilitate more rapid and secure settlement of cross-border financial transactions.
The adoption of CBDC becomes more pertinent as the payments system is continually expanding and evolving to include multiple traditional and non-traditional participants, acting as financial services providers.
China has been steadfast in its approach to CBDC and announced last year that it will soon replace its cash in circulation with a new digital currency. In July this year, The Bank of Japan announced that it was testing the tokenisation of the Japanese yen.
Mastercard is leading the charge and handholding central banks as they inch toward CBDC. These financial institutions will in turn, open up new business opportunities for the company as they look to tie up with payment networks for CBDC issuances.
Another company in the same space Visa Inc. (V - Free Report) has also been engaging with policy makers and global organizations to help shape the dialogue and understanding of digital currencies. This includes the payment facilitator’s work with the World Economic Forum and its collaboration on a set of policy recommendations for central banks exploring the concept of CBDC.
Year to date, the stock has rallied 20.8% compared with its industry’s growth of 10.9%.
Mastercard currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Evertec Inc. (EVTC - Free Report) and Green Dot Corporation (GDOT - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. Earnings of Evertec and Green Dot surpassed estimates in the last reported quarter by 18.75% and 38.71%, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>