Mastercard is seeking a role in the development of China’s central bank digital currency (CBDC) by supporting the use of the digital yuan for cross-border transactions and its conversion to and from foreign currencies, according to South China Morning Post (SCMP).
Mastercard Asia-Pacific co-president Ling Hai confirmed in an interview with the Hong Kong-based publication that the People’s Bank of China (PBOC) is one of a number of central banks that the card network is in discussion with in order “to 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 said.
Ling Hai also indicated that Mastercard may be considering a prepaid card enabling users to store and convert digital yuan similar to the one it launched in the Bahamas for storing and converting the country’s Sand Dollar CBDC.
“Extending the experience of the Bahamas Sand dollar, in the future a Hong Kong resident with a prepaid card could convert their Hong Kong dollars into digital yuan and reduce the need for currency conversion when travelling within the bay area,” SCMP says.
“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.
“For us, supporting a central bank digital currency is similar to adding another fiat currency onto our network.
“Conversion across a hybrid of both fiat and digital currencies could hold the key to broadening merchants’ acceptance of central bank digital currencies.”
The PBOC unveiled its CBDC ‘Bridge’ project with the Hong Kong Monetary Authority, the Bank of Thailand and the Central Bank of the UAE to explore the use of digital currency cross-border payments in February.