In a landmark essay on CBDCs, Mastercard partnered with the Reserve Bank of Australia (RBA) and the Cooperative Research Centre for Digital Finance. Other collaborators in the essay included Cuscal and Mintable. Together, they explored the possibilities of wrapping central bank digital currencies on various blockchains, reminiscent of concepts such as Wrapped Bitcoin (wBTC) and Wrapped Ether (wETH).
In a live environment, the essay allowed an individual with a CBDC to purchase a listed non-fungible token (NFT) on the Ethereum blockchain. Describing the mechanics, Mastercard stated that the required amount of the pilot CBDC was “locked” on the RBA’s pilot CBDC platform. Simultaneously, a corresponding amount of wrapped pilot CBDC tokens was minted on Ethereum.
Strategic Controls in Place
In order for the test transaction to take place, all participants – the buyer, seller, and the NFT marketplace smart contract on Ethereum – had to be whitelisted by the platform. The process demonstrated that, despite operating on public blockchains, the platform could still enforce strict controls.
In collaboration with Mastercard, we have identified a use case where digital currencies and NFTs can be easily linked, which could help eradicate fraud and theft, put an end to document and record loss, and open up new possibilities for commerce.
This feat relies on the capabilities of Mastercard’s Multi Token Network, which was unveiled in June 2023. The platform seamlessly marries traditional payment methodologies with blockchain technologies. Zack Burcks, CEO and founder of Mintable, expressed his enthusiasm, envisioning new opportunities where digital currencies and NFTs converge to revolutionize commerce, reduce fraud, and ensure documentation consistency.
Future Potential and Considerations
While this essay showcases the immense possibilities of Wrapped CBDCs, the RBA has previously taken a cautious stance. The bank acknowledges that an Australian dollar CBDC could pave the way for advanced payment solutions and innovations in the financial sector that traditional fiat money cannot replicate. However, the bank has also emphasized the need for further research to gain a comprehensive understanding of the benefits.