Mastercard’s Raj Dhamodharan agrees that CBDCs could work alongside existing schemes such as RTP to enable central banks to focus on CBDC minting and issuance while banks and PSPs focus on payment processing and distribution through existing channels
Many believe we are at a moment of an inflection where we face two options for modernising payments. On one path, payment providers have an existing payments infrastructure that moves money efficiently with the potential for far more efficiencies through upgrades to real-time payments, as many countries are pursuing.
On the other path, we have distributed ledger and digital asset technologies that promise to usher in superior experiences for the payments’ world. Policymakers and regulators everywhere are exploring central bank digital currencies, or CBDCs, which offer many of the same capabilities as real-time payments – real-time tracking and tracing, immediate settlement and enhanced programmability of money – while offering consumers and businesses a new way to pay.
If the two paths remain separate, people could find themselves in a confusing and cumbersome situation where money cannot flow quickly or smoothly – like a consumer who receives a check but has no bank account in which to deposit it.
The good news is that we need not choose. The two options can live in concert with each other, and this will provide the best and most seamless consumer experience. They can be interwoven, leveraging the existing systems and bringing in newly-formed digital assets that provide instant settlement and real-time visibility. The payments community can realise greater customer satisfaction and cost savings and mitigate unnecessary complexity for all ecosystem users.
As central banks explore CBDCs use cases — identifying benefit, market impact, and adoption strategies — they must consider how a new monetary instrument will operate and interact with the existing payment infrastructure and payment endpoints. A CBDC operating in a separate ecosystem with new rails and user interfaces will create complexity for users, require significant up-front investment to create ubiquity, and slow down adoption. Instead, CBDCs need to be interchangeable between ecosystems to simplify usage and facilitate mass consumer adoption.