Visa, in partnership with ConsenSys, a blockchain software company, will start offering central banks a way to test retail applications for digital currencies they might issue.
Investors King has reported that governments across the globe have been exploring the release of Central Bank Digital Currencies (CBDCs), in the face of fears that rapidly growing cryptocurrencies could destabilise financial markets or replace fiat currencies.
According to the Director of the CBDC at Visa, Catherine Gu, the CBDC could expand access to financial services and make government disbursements more efficient, targeted and secure. She stated that this is an attractive proposition for policymakers, adding that with CBDC, a central authority could send prompt payments to a targeted set of program-specific users and spending parameters.
A report by Bloomberg reveals that the card payment provider will begin piloting a programme this spring with ConsenSys, after discussions with roughly 30 central banks about goals related to government-backed digital currencies.
“We think that stablecoins and CBDCs will coexist in the future and there will be a number of different approaches to creating products based on that”, Visa’s head of crypto, Mr Cuy Sheffield said.
Payment service providers are likely to view government-backed digital assets as a safe and secure way to use blockchain, which aims to be faster and more efficient than traditional electronic transactions. Investors king recalls that Mastercard launched a similar CBDC testing platform in 2020.
Nigeria and the Bahamas are among the nations already circulating CBDCs, and China is piloting a digital yuan in several cities before plans to push use at the Beijing Winter Olympics.
The new Visa and ConsenSys tech will be able to plug into existing payments modules. This means that companies will be able to integrate infrastructure to issue things like CBDC-linked payment cards or wallet credentials. This is designed to provide an on-ramp for existing networks.
ConsenSys, led by Ethereum co-founder Joseph Lubin, has worked with several central banks to test CBDCs including the Hong Kong Monetary Authority, Reserve Bank of Australia, and Bank of Thailand.
Meanwhile, Visa currently offers payment cards linked to USD Coin, a stable coin issued by a consortium that includes Circle Internet Financial Inc.