Visa And Consensys Will Pilot Payment Infrastructure For CBDCs
As central banks around the world dig deeper into central bank digital currency (CBDC), Visa and ConsenSys, a blockchain software startup, are working to develop a central bank digital currency (CBDC) pilot program to explore retail applications such as cards and wallets.
The plan is for both firms to first meet with around 30 central banks to discuss the goals that governments hope to achieve with government-backed digital currency. The pilot program is scheduled to begin in the spring of 2022.
Visa CBDC Pilot
Visa announced earlier this week that it will take its crypto services to the next level by teaming with blockchain software company Consensys to build a CBDC onramp.
As part of the initiative Visa is planning to create a “CBDC sandbox”, where central banks can try out the technology after minting it on Consensys’ Quorum network.
Customers will be able to use their CBDC-linked Visa card or digital wallet anyplace Visa is accepted globally, said Catherine Gu, Visa’s head of CBDC, she said:
“If successful, CBDC could expand access to financial services and make government disbursements more efficient, targeted and secure – that’s an attractive proposition for policy makers.”
The term central bank digital currency (CBDC) refers to the virtual form of a fiat currency. A CBDC is an electronic record or digital token of a country’s official currency – issued and regulated by the nation’s monetary authority or central bank.
Countries Are Launching CBDCs
Regulators around the world are having a hard time to figure out how to treat CBDCs in a changing financial landscape dominated by cryptocurrencies, and rivaling stablecoins. The way things are moving currently, it seems that crypto and digital money will upend financial markets or replace fiat currency, which is a major issue for the current global financial status quo.
Back in 2020, Mastercard announced the launch of a CBDC test platform, which allowed banks to simulate the issuance, distribution, and exchange of CBDCs amongst banks, financial service providers, and consumers.
Chuy Sheffield, Visa’s head of crypto, said:
“Central banks are moving from research to actually wanting to have a tangible product they can experiment with.”
Visa’s new initiative has the potential to help bridging the gap between central banks and financial institutions. Visa is accepted by over 80 million merchant locations worldwide.
In the last year and a half, the number of countries investigating CBDCs has more than doubled. According to the Atlantic Council’s CBDC tracker, at least 87 different countries (accounting for 90% of global GDP) are considering financial technology in some way.
China has already started a number of digital yuan pilot initiatives and plans to accept the currency for the Beijing Winter Olympics. Nigeria and the Bahamas have their own CBDCs in circulation.
