Payments giant Visa has partnered with blockchain technology solutions firm Consensys to develop technology for central bank digital currencies (CBDCs).
With plans to launch in the spring, Visa wants to build an on-ramp, or a “sandbox” for central banks to mint CBDCs using Consensys’ Quorum protocol.
Visa and Consensys will utilize a “two-tier” distribution system for CBDCs where central banks can use Quorom to set the coin’s monetary attributes, and then use Visa’s payment channels to distribute it to financial institutions.
“Visa’s CBDC Payments Module is designed to provide an on-ramp for CBDC to existing payment networks, so that CBDC networks can easily connect to traditional financial service providers. For banks and issuers processors, they’ll be able to plug into the module and integrate their existing infrastructure and be enabled to do things like issue CBDC-linked payment cards or wallet credentials for consumers to use,”
said Catherine Gu, Visa’s Head of CBDC.
“The next two to three years will be critical” in understanding the role CBDC will play in payments systems in the future, she said. “The key challenge is understanding how new forms of money can coexist with existing means of payments and existing systems.”
Data from The Atlantic Council suggests that 87 countries representing 90% of the world’s GDP are exploring CBDCs in some shape or form. In the US, conversations are ongoing but there is no clear roadmap.
Federal Reserve Chairman Jerome Powell said in his nomination hearing that a full report on digital currencies – presumably primarily CBDCs – was ready to go and would be coming in the next few weeks.
“It was hard and we didn’t get it quite to where we needed to get it but it’s effectively there now and I will tell you it’s within weeks we will be publishing it.
And by the way, it’s more going to be an exercise in asking questions and seeking input from the public rather than taking a lot of positions on various issues, although we do take some positions.”