Following after its rival, Mastercard Inc, Visa Inc is offering central banks the opportunity to test CBDC retail applications such as the eNaira.
A program with blockchain company ConsenSys Inc. will begin this spring after the payment’s provider discussed goals related to government-backed digital currencies with more than 30 central banks.
In response to fears that cryptocurrencies may destabilize financial markets or replace fiat currencies, governments around the world have been exploring the release of central bank digital currencies.
According to Cuy Sheffield, Visa’s head of crypto, stablecoins and CBDCs will coexist in the future and there will be multiple approaches to creating products based on them.
Read: Adapt or Die: Why CBDCs have changed the future of banking
Blockchain could be a way to utilize government-backed digital assets, which are more efficient and faster than traditional electronic transactions. Payment service providers may therefore see these as a safe and secure method of using blockchain.
MasterCard launched a similar platform to test CBDC in 2020. Further, Visa is currently offering payment cards linked to USD Coin, a stablecoin issued by a consortium including Circle Internet Financial Inc.
Read: e-Naira: How safe is Nigeria’s Central Bank Digital Currency?
CBDCs are already in circulation in Nigeria and the Bahamas, and China is piloting a digital yuan in several cities ahead of the Beijing Winter Olympics.
In addition to the Hong Kong Monetary Authority, the Reserve Bank of Australia, and the Bank of Thailand, ConsenSys, led by Ethereum co-founder Joseph Lubin, has worked with several central banks to test CBDCs.
An evaluation of a government-backed virtual currency is expected to be published by the Federal Reserve in the coming weeks.
