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Mastercard Demonstrates How Existing Commercial Bank Rails Could Drive Adoption of Central Bank Digital Currencies (CBDCs) in the Future

Leveraging its Multi-Token Network, Mastercard developed the solution for HKMA’s e-HKD Pilot Programme 

HONG KONG, Nov. 7, 2023 /PRNewswire/ — Mastercard today announced that it has completed the Hong Kong Monetary Authority’s (HKMA) e-HKD Pilot Programme, which demonstrated the efficacy of the Mastercard Multi-Token Network solution to settle Web3 transactions involving decentralized applications and digital assets, such as NFTs. The pilot also showcased the potential for seamless funding and settlement in and out of Web3 marketplaces via a retail central bank digital currency (CBDC), such as e-HKD in the future. 

In testing its solution, Mastercard simulated a full lifecycle of the hypothetical e-HKD, from minting and distribution to spend and redemption within its sandbox environment. In addition, the pilot simulated conditionality to ensure the quality and successful delivery of the physical item purchased using smart contract functionality, which reduces risk for all parties involved in the transaction.  

The pilot leveraged two pillars of the Mastercard Multi-Token Network, which the company introduced in June 2023 as a set of foundational capabilities designed to enable more efficient payment and commerce applications using blockchain technology. This includes Mastercard Crypto Credential, which offers a set of common verification standards and infrastructure to enable trusted interactions using blockchain networks, in addition to interoperability to offer capabilities across all supported payment tokens and networks in a scalable manner.  

Sandeep Malhotra, executive vice president, products & innovation, Asia Pacific, Mastercard, said, “What’s exciting about this pilot is that it demonstrated the ability to use digital currencies across multiple platforms, as well the potential to utilize existing commercial bank rails to drive overall adoption. It also showcased how aspects of the Mastercard Multi-Token Network could potentially be used to solve real-world pain points. In this case, we explored the safe and secure purchase of a physical luxury item with an associated NFT that represents its certificate of authenticity from an unknown party.”

The beta version of the Multi-Token Network, which was used to support Mastercard’s pilot in the Programme, is one of several Mastercard proprietary virtual testing environments and is being deployed globally as a testbed for developing live pilot applications with financial institutions, fintechs and central banks. 

“Based on the outcomes and learnings of the e-HKD pilot, Mastercard looks forward to continuing to support the HKMA, and other central banks, as they explore how CBDCs can be integrated with existing ways to pay, making it easier for consumers and businesses to transact in the Web3 economy, while maintaining monetary policy and financial stability,” added Malhotra.

Mastercard was one of 16 participants chosen by the HKMA in May 2023 to take part in the pilot scheme. The program was designed to investigate e-HKD use cases in six categories: full-fledged payments, programmable payments, offline payments, tokenized deposits, settlement of Web3 transactions and settlement of tokenized assets.

Mastercard is a global leader in operating multiple payment rails and convening public and private sector partners to bring the most people possible into the digital economy. 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 existing payment rails available for consumers and businesses. Learn more about Mastercard’s approach to partnering with central banks to develop CBDCs here.  

Watch the video: https://tinyurl.com/5yxdhdkb 

About Mastercard (NYSE: MA), www.mastercard.com

Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.