After enough internal testing locally, the Chinese central bank – The People’s Bank of China (PBoC) – is all set to take its CBDC Digital Yuan global. As per the recent report from the South China Morning Post, the payments giant Mastercard is currently in talks with PBoC to facilitate the cross-border transactions for Digital Yuan.
Ling Hai, Mastercard’s Asia-Pacific co-president confirmed the Hong Kong-based publication about the same. It said that PBoC is one of many other central banks that is currently holding discussions “to enable cross-border use of their respective digital currencies”. Hai added:
“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”.
Mastercard will reportedly offer a prepaid card that will allow users to store and convert the Digital Yuan while initiating any cross-border transactions. The company has already conducted this experiment with the world’s first digital currency – The Bahamas Dollar.
Thus, a Hong Kong resident can convert the local dollar into Digital Yuan and further reduce the need for currency conversion.
Maintaining Interoperability While Ensuring Cross-Border Payments
The Mastercard co-president Hai said the central banks can focus on domestic issues of ensuring the smooth functioning of its sovereign currency. Mastercard will ensure interoperability as the payments move across the country’s borders. 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 has been already working with some central banks in the Asia Pacific region. Under its CBDC ‘Bridge’ Project the Chinese central bank has joined hands with the Central Bank of UAE and Bank of Thailand to explore cross-border Digital Yuan transactions.