Visa Inc. joined its rival Mastercard Inc. in offering central banks a way to test retail applications for digital currencies they might issue.
The card payment provider will begin piloting a program this spring with ConsenSys Inc., a blockchain software company, after discussions with roughly 30 central banks about goals related to government-backed digital currencies.
Governments across the globe have been exploring the release of central bank digital currencies, CBDCs, in the face of fears rapidly growing cryptocurrencies could destabilize financial markets or replace fiat currencies.
“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,” said Cuy Sheffield, Visa’s head of crypto.
Payment service providers likely see government-backed digital assets as a safe and secure way to utilize blockchain, which aims to be faster and more efficient than traditional electronic transactions.
Mastercard launched a similar CBDC testing platform in 2020. Additionally, Visa currently offers payment cards linked to USD Coin, a stablecoin issued by a consortium that includes Circle Internet Financial Inc.
Nigeria and the Bahamas are among the nations already circulating CBDCs, and China is piloting a digital yuan in several cities before plans to push use at the Beijing Winter Olympics.
ConsenSys, led by Ethereum co-founder Joseph Lubin, has worked with several central banks to test CBDCs including the Hong Kong Monetary Authority, the Reserve Bank of Australia, and the Bank of Thailand.
The U.S. Federal Reserve is expected to publish a report evaluating a government-backed virtual currency in the coming weeks.