Supposedly, Mastercard wants to work with the Chinese central bank, the People’s Bank of China. The goal is to use the digital yuan in the payment giant’s systems.
Mastercard and China
According to SCMP, the card payments giant is in talks with the People’s Bank of China (PBOC) and other central banks to convert their local digital currencies into fiat currencies.
The idea is to use Mastercard’s global payment network of 2 million ATMs and 70 million trading partners to convert central bank digital currencies (CBDCs) into national currencies.
Ling Hai, co-chairman of Mastercard Asia-Pacific, told SCMP:
While central banks can address their national problems with digital sovereign currencies, the role we can always play is interoperability when the payment goes beyond national borders. For us, supporting a central bank’s digital currency is similar to adding another fiat currency to our network.
CBDC in China and around the world
China is currently conducting pilot testing of electronic currency payments in digital currency in key cities, including Suzhou, Xiongan, Shenzhen and Chengdu.
Hong Kong’s monetary authorities also want to extend the use of the virtual yuan to the Greater Bay area, which includes Hong Kong and Macau.
In February, China joined Hong Kong, Thailand and the United Arab Emirates as part of the so-called a currency bridge of many central banks that explores the cross-border use of sovereign digital currencies.
The West is also working on CBDC, but much slower. The head of the Fed has even admitted recently that the US does not want to race against China in this field. Jerome Powell also spoke of the nature of the future dollar.
One of the three key principles highlighted in the report is that CBDC must coexist with cash and other types of money in a flexible and innovative payment system.
At the same time, the Fed branch from St. Louis says decentralized finance (DeFi) “Unleashed a wave of innovation”that could, in a few years’ time, create a more transparent financial infrastructure around the world. You can read more about it here.