Visa is collaborating with ConsenSys, a blockchain software company, to create a central bank digital currency (CBDC). It is a pilot programme to test retail applications including cards and wallets. Both companies will initially meet with about 30 central banks. The meeting aims to discuss the objectives that governments seek to achieve with government-backed digital money. In the spring of this year, the pilot programme will begin.
CBDC pilot project in some countries only
Visa said on Thursday that it will expand its crypto services by partnering with Consensys, a blockchain software startup. Consequently, it aims to develop a central bank digital currency (CBDC). In the spring, the payments giant wants to open a “CBDC sandbox”. It will allow central banks to test various technologies. Moreover, the Consensys’ Quorum network will develop these technologies.
Catherine Gu, Visa’s head of CBDC, chatted with ConsenSys in a blog post-Q&A. According to Gu, customers would be able to use their CBDC-linked Visa card or digital wallet everywhere Visa is accepted internationally. Catherine Gu 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 policymakers.”
A CBDC is a digitally issued central bank obligation. It can be used by the general public and is analogous to the US dollar.
CBDCs are being launched by countries
The judgement comes as authorities across the world grapple with how to approach CBDCs in the face of a rapidly changing financial landscape driven by cryptocurrencies. Additionally, the idea that cryptocurrency and digital money would upend financial markets or replace fiat money is a serious concern.
In 2020, MasterCard will introduce a CBDC test platform. Consequently, allowing banks to mimic the issuance, distribution, and exchange of CBDCs among banks, financial service providers, and consumers. Moreover, Chuy Sheffield, Visa’s head of crypto, said, “Central banks are moving from research to actually want to have a tangible product they can experiment with.”
If it succeeds, Visa might help bridge the gap between central banks and financial firms. As a result, over 80 million merchant locations will now accept visas throughout the world. The number of countries studying CBDCs has more than doubled in the last year and a half. At least 87 nations, representing 90 percent of global GDP, are examining financial technology in some form, according to the Atlantic Council’s CBDC tracker.
China has already launched many digital yuan pilot projects and wants to accept the cash for the Beijing Winter Olympics. Moreover, the Bahamas and Nigeria each have their own CBDCs in circulation. Visa announced the launch of a global crypto consulting practice in early December, with the goal of assisting financial institutions in strengthening their cryptocurrency operations as the demand for crypto goods develops.