MasterCard Forecasts Shift Toward Institutional Digital Assets by Central Banks

MasterCard’s Raj Dhamodharan, head of the crypto division, has shared insights suggesting a shift in the approach of central banks toward digital currencies.

Instead of focusing on retail CBDCs (central bank digital currencies) for consumers, Dhamodharan predicts that more central banks will prioritize creating digital assets designed for financial institutions and banks.

He highlights that the change could be influenced by regulatory measures, including an executive order from former President Trump, which aims to limit the development of CBDCs for public use, viewing them as a potential threat to the financial system’s stability.

According to Dhamodharan, a few years ago, many central banks were exploring the idea of digital currencies for general consumers. However, the consensus has now shifted, with central banks recognizing that the private sector is advancing in this area, and retail CBDCs are no longer a major focus

Looking ahead to 2025, Dhamodharan expects a broader trend where central banks will focus on “wholesale” CBDCs aimed at improving financial infrastructure, rather than retail CBDCs. These wholesale digital currencies could enhance settlement processes for institutions, improving the speed of capital movement across borders.

While central banks are scaling back on consumer-oriented digital currencies, the World Economic Forum (WEF) had earlier projected that by 2030, 24 CBDCs could be operational, reflecting a continued interest in central bank digital assets tailored for the institutional sector.