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Visa Teams Up With Consensys To Build Payment Infrastructure For CBDCs


Visa and ConsenSys, a blockchain software startup, are developing a central bank digital currency (CBDC) pilot program to explore retail applications such as cards and wallets.

The two companies will first meet with an estimated 30 central banks to discuss the goals governments hope to achieve with the government-backed digital currency. The pilot program is scheduled to begin in the spring of this year.

Visa to pilot CBDC in selected countries

Visa(V) announced Thursday that it will take crypto services to the next level by teaming up with blockchain software company Consensys to create a central bank digital currency onramp (CBDC).

The payments giant plans to launch a “CBDC sandbox” in the spring, where central banks can try out the technology after minting it on Consensys’ Quorum network.

Visa Trades At $214. Source: TradingView

Customers will be able to use their Visa card or digital wallet tied to their CBDC anywhere Visa is accepted globally, according to Catherine Jo, Head of CBDC at Visa, who spoke with ConsenSys in a Q&A blog post.

He said to:

“If successful, CBDCs could expand access to financial services and make government payments more efficient, targeted and secure — an attractive proposition for policy makers.”

A CBDC is a type of central bank obligation that is issued in digital form and can be used by the general public, compared to the US dollar.

Related article | Visa Survey Shows Crypto Payments Could Thrive in 2022

Countries are launching core digital currencies for business

The decision comes as regulators around the world struggle to figure out how to handle digital central bank currencies in a changing financial landscape dominated by cryptocurrencies. The idea that cryptocurrencies and digital money will upend financial markets or replace fiat currencies is a major problem.

Mastercard also announced the launch of its CBDC testing platform in 2020, which will allow banks to simulate the issuance, distribution and exchange of digital central bank currencies between banks, financial service providers and consumers.

“Central banks are moving from research to wanting a tangible product that they can try,” said Choi Sheffield, head of crypto at Visa.

If Visa is successful, it could help bridge the gap between central banks and financial institutions. Visa is accepted at more than 80 million merchant locations worldwide.

In the past year and a half, the number of countries investigating digital central bank currencies has more than doubled. According to the Atlantic Council’s CBDC tracking, at least 87 different countries – accounting for 90% of global GDP – are considering fintech in some way.

China has already started a number of digital yuan trial initiatives and plans to accept the currency for the Beijing Winter Olympics. Nigeria and the Bahamas have their own primary digital binary currencies in circulation.

In early December, Visa announced the formation of a worldwide crypto advisory practice to assist financial institutions in developing their own cryptocurrency operations as demand for crypto-goods grew.

Related article | Visa is building a network of payment channels on Ethereum

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