Visa collaborated with ConsenSys to integrate CBDC with Traditional Finance

• The collaboration is to bridge the gap between CBDCs and traditional financial service providers.
• Customers will be able to use their CBDC-linked Visa cards wherever Visa is accepted.
• Government disbursements can be made more secure, targeted, and efficient through expansions of CBDC to financial institutions, said Visa’s head of CBDC.

On Thursday, Visa announced a partnership with ConsenSys, a blockchain software company, to build a module that will be designed to facilitate central banks and financial institutions to develop services that are user-friendly on the networks of Central Bank Digital Currency (CBDC).

According to the company, this partnership will bridge the gap between new frameworks of CBDC and the traditional financial institutions so that they can create a roadmap for adoption and which also helps and allows its customers to pay out CBDC to any merchant that accepts Visa.

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According to a spokesperson of Visa, they’ve conversed with around 30 central banks to understand what their perspective is on CBDCs and to find ways in which they can support them through their value-added services and the network infrastructure.

Jerome Powell, chairman of the Federal Reserve, stated in front of the Senate Banking Committee during his confirmation hearing that a report related to digital currencies can be anticipated to come in the coming weeks. Powell also talked about his belief that privately issued stablecoins and CBDCs can co-exist.

Tom Emmer, a US representative, proposed a bill this Wednesday that is meant to prevent the Fed from issuing CBDC directly to the individuals and further noted in a statement that the US government should not compete with the private sector here.

When the central banks or the Federal Reserve would launch the CBDCs cannot be predicted as for now, stated by The Visa representative.

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According to a blog post published on Thursday, Catherine Gu, the Visa’s head of CBDC, said that if CBDC is successful, it can make the government’s expenditures more efficient, secure, and targeted through expanding access to the financial services. Sending payments quickly to a targeted audience with set parameters of spending is a use case for digital currencies. 

Director of Strategic Sales at ConsenSys Shailee Adinolfi said, To see widespread adoption of CBDC, traditional financial players and central banks have to work together. 

Visa is in the process of incorporating its module with the ConsenSys Codefi CBDC sandbox powered by the ConsenSys quorum, which is an open-source version of the Ethereum protocol. 

Adinolfi said that the robust open-source protocol layer of Quorum makes sure about the compatibility with the Ethereum Mainnet network along with the products and tooling in its ecosystem. 

This collaboration with Mastercard to focus on the challenge of scalable applications on the Quorum tech-slack was announced by ConsenSys last month. 

The Exploration of the use cases of the module is expected to be done in Spring by Visa, said by Gu, the company will be ready to work with central banks, fintech, and financial institutions by then and to integrate the module with their technology. This partnership seems to facilitate the end-users that are the public to use their Visa cards to pay out in CBDC, which might boost the adoption of CBDCs.