14.01.202215:20 Forex Analysis & Reviews: Visa to test its cryptocurrency services

On Thursday, Visa Inc joined its rival Mastercard Inc., offering central banks a chance to test retail applications for the digital currencies they will issue

This spring, the card-payment provider will start a pilot program with ConsenSys Inc, a blockchain software company, after discussions with about 30 central banks whose goals involve government-backed digital currencies.

Governments around the world are exploring the possibility of central bank digital currencies, CBDC amid concerns that fast-growing cryptocurrencies could destabilize financial markets or even replace fiat currencies.

Cuy Sheffield, Visa's head of crypto said: "We think that stablecoins and CBDCs will coexist in the future, and there'll be a number of different approaches to creating products based on that."

Payment service providers likely see government-backed digital assets as a safe and secure method to use blockchain, which should be faster and more efficient than traditional electronic transactions.

Mastercard launched a similar CBDC testing platform in 2020. Besides, Visa is working with more than 60 crypto platforms to issue cards linked to digital currencies, such as USD Coin, a stablecoin issued by a consortium that includes Circle Internet Financial Inc.

Nigeria and the Bahamas are among the few countries already circulating CBDCs. Moreover, China is testing a digital yuan in several cities before planning to use it at the Beijing Winter Olympics.

ConsenSys, which is being led by Ethereum co-founder Joseph Lubin, has worked with several central banks to test CBDC, including the Hong Kong Monetary Authority, the Reserve Bank of Australia and the Bank of Thailand.

The US Federal Reserve is expected to release a report evaluating the government-backed virtual currency in the coming weeks.