The payments giant announced the project on Wednesday morning, calling it the Central Bank Digital Currencies Testing Platform—a bland title to be sure, but one likely to find favor with cautious central bankers.

For central banks, including the Federal Reserve, a purely digital currency—one not linked to coins or paper bills—would represent a step beyond the existing system of electronic money transfer. A central bank could, for instance, distribute money directly to consumers without relying on commercial banks as intermediary.

State-backed digital money also offers the potential for greater efficiency in payments and money transfers, letting merchants settle deals instantly, and avoid the current patchwork of banks and clearing houses, which can take days.

Mastercard’s platform—or “sandbox” in tech parlance—will let central banks issue digital versions of their currency in a controlled environment, and test how those currencies plug into existing bank and payment networks, and to see if they are practical for consumers to buy goods and services.

In an interview with Fortune, Mastercard EVP Raj Dhamodharan said the company is already working with a number of central banks, and that it is inviting various third parties, from banks to tech companies, to join its testing platform.

The Mastercard initiative comes at a time of growing interest in digital currency among central banks. A 2018 survey by the International Monetary Fund, cited by the Wall Street Journal, found government bankers are experimenting with the technology as a way to lower costs and to blunt the rise of private cryptocurrencies like Bitcoin. A more recent survey by the Bank for International Settlements found that 80% of the world’s central banks are engaged in some form of digital currency research.

The advent of state-backed digital currencies is also fraught with geopolitical significance. The People’s Bank of China is on the cusp of launching a digital yuan, which many believe will help China weaken the influence of the greenback in global trade. Meanwhile, the outgoing governor of the Bank of England, Mark Carney, speculated last year that a group of companies could back a new digital currency to challenge the dollar’s role as the preeminent reserve currency.

Not to be outdone, a consortium of companies led by Facebook is working on a new form of digital money called Libra, which is pegged to traditional currencies, and could offer the social network’s billions of users a new way to shop and pay.

Projects like Libra and, especially, the digital yuan also pose significant privacy risks, as the networks on which the currencies travel can also track who is spending money and where.

According to Dhamodharan, Mastercard is sensitive to privacy issues and is building its testing kit to reflect that. He declined to provide any details about the software Mastercard is using to deploy its test network, other than to say it involves blockchain—the same technology on which Bitcoin is built.

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