Mastercard is eyeing a role in the development and advancement of China’s central bank digital currency (CBDC), by providing support in the use and conversion of the digital yuan for cross-border payments.
In an interview with the South China Morning Post, Mastercard Asia-Pacific co-president Ling Hai revealed that the card network is in discussions with the People’s Bank of China (PBOC), along with a number of other central banks, to devise a way that would “enable cross-border use of their respective digital currencies.”
“Central bank digital currencies such as that being piloted by Beijing could be circulated outside their home countries and converted into foreign currencies via a card clearing network acting as the conversion agent,” Ling Hai explained. He also suggested that Mastercard may even examine the possibility of a prepaid card that would allow users to hold and convert digital yuan, similar to a previous initiative the credit card giant launched in the Bahamas for storing and converting the country’s Sand Dollar CBDC.
By utilizing the same format that was used for the Bahamas Sand Dollar, it would allow a resident in the Greater Bay Area— which is comprised of nine cities— to convert their domestic currency into digital yuan and thus forego the need for currency conversion when travelling. “While central banks can address their domestic issues associated with digital sovereign currencies, the role we can always play is on interoperability, when the payment goes beyond a country’s borders,” Ling Hai added.
According to Mastercard, the development of a seamless conversion that can encompass both fiat and digital currencies could be the key to a broader acceptance of central bank digital currencies among merchants. Indeed, wider uses of the digital yuan are already being analyzed; back in February, the PBOC revealed that it has entered into a digital currency “bridge” project alongside its central bank counterparts in Hong Kong, Thailand, and the United Arab Emirates, to conduct cross-border payments using central bank digital currencies.
Information for this briefing was found via the South China Morning Post. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.