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Visa and Consensys Partner to Help Banks Design and Distribute CBDCs

As nations continue to join the CBDC train, payments giant Visa has partnered with Consensys to provide Central banks with a way to way to design and distribute CBDCs.

Using Consensys’ Quorum, central banks will be able to design their CBDCs and establish their preferred monetary and governance rules. They will then use Visa’s CBDC Payments Module as an on-ramp for CBDCs to existing payment networks. The payment module will allow financial institutions to integrate their pre-existing infrastructure and use its network to distribute the currency through commercial banks and other financial institutions.

The partnership will kick off by spring with a pilot and prototype program across different banks. Already, Visa has been in discussions with about 30 banks on discussions around CBDCs.

Head of CBDC at Visa, 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 policy makers.”

Visa Optimistic about CBDCs despite Challenges

With this announcement, Visa joins its rival company, Mastercard, in bridging the gap with traditional financing. Recall that earlier in 2020, Mastercard launched a similar CBDC testing platform. Since that time, the number of countries exploring the CBDC option has doubled.

Experts at Visa believe that CBDCs can help facilitate the efficient distribution of stimulus packages in developed countries and aid financial inclusion in developing countries. However, it is not without challenges. Mainstream adoption and acceptance of the currencies will depend on how much control the central bank has on the currency. This is even as people are looking for more decentralized payment options. Likewise, the CBDCs can contest with local fiat affecting the value of the currency.

Despite these challenges, Atlantic Council’s CBDC tracker suggests up to 90 countries are in different stages of researching, testing, and developing CBDCs. The Bahamas and Nigeria are two nations that have already started circulating CBDCs. China is also at an advanced stage of development and is pushing for the use of the digital yuan at the Beijing Winter Olympics later in the year.

Interestingly, these 90 countries account for up to 90% of the global GDP even though the Federal Reserve and some other major central banks are absent from the list. On its part, the US Federal Reserve is expected to publish its research findings on the feasibility of a government-backed virtual currency soon.

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Visa and Consensys Partner to Help Banks Design and Distribute CBDCs