FIS is looking to governments to help banks win more business. PaymentsSource

FIS argues that now is the time for banks to participate in central bank digital currency development.

“There will be a role for banks and other organizations that provide financial services,” said Julia Demidova, FIS head of CBCC and digital currency strategy. “Central banks and public sector institutions are looking to see what it takes to support the new payments ecosystem.”

FIS this week launched RealNet Central, a service to help central banks deploy digital-first real-time payment networks. The bank’s technology company has added a CBDC Virtual Lab to help governments build CBCCs, or the digital version of a country’s currency. Other large private sector organizations are seeking a place in CBDC development. Visa and MasterCard Both are public central banks.

Bloomberg Creative Photos/Bloomberg Creative

“We’re working on building functionality by determining what the use cases are and how it fits into existing payment systems,” Demidova said.

FIS is working together. M10, a technology company that certifies traditional currency, a process that creates a digital representation of a process that is held under the control of a financial institution. This allows banks to exchange tokenized cash for tokenized digital currency.

Governments have become more active in payment technology in recent years. Real-time payment projects include FedNow, which is expected to launch in the US in 2023, joining the private-sector-led RTP train. Other real-time payment networks include Instant Payments in the UK and the Single European Payments Area in the EU. Canada’s Real Time Rail, a coalition of government and banking stakeholders, is expected to launch in 2023.

Real-time settlement is a key component of CBDCs designed to support online transactions for consumers, governments and businesses. There are dozens. CBDC projects It is taking place globally, although the nature of these projects varies, depending on the structure of each CBCC. And in some cases, like America, it still is. It is not a strict commitment To issue a government-backed digital currency.

The pace and uncertainty over the structure has raised concerns about interoperability between CBCCs, and fears from banks that government-backed digital currencies could deplete existing account balances.

What about banks?

writing b American BankerRob Blackwell, chief content officer of the Infrafit Network and former editor-in-chief of Bank of America, said the Fed could use digital dollars to create an alternative to federally insured deposits, take away funding from community banks and affect credit availability. .

While FIS, Visa, and MasterCard are developing technologies designed for central banks, all three organizations serve networks of thousands of card-issuing banks, so these banks play an important role in supporting digital currencies.

“Banks are worried about mediation,” said Demidova. “They’re asking us what CBDCs look like.”

Visa has partnered with Consensys, a blockchain technology company, to develop an infrastructure that issuers can use to build services on CBCC systems. Visa is in discussions with central banks about how its network and non-banks can fit into different CBCC models, and how the card brand can work with merchants and central banks to process cross-border transactions that involve conversions between CBDCs.

MasterCard may partner with Consensys to co-develop blockchains to include CBDC payment processing. MasterCard has partnered with the CBCC project in the Bahamas.

In a letter of recommendation to the Federal Reserve, it has been Gathering public input At the CBCC, MasterCard advocated for a standardized system that the US government works with private companies to support digital dollars.

These partnerships suggest that private banks will play a role in CBCCs, perhaps offering products and services that allow consumers and businesses to trade in digital currencies. Demidova envisions a role for banks as service providers and competitive technology developers supporting the use of digital currency.

“Part of the central bank’s mandate is to provide safe, accessible money,” she said. “Central banks are the guardians of financial stability.”

FIS serves about 20,000 customers in more than 130 countries, including banks and merchants. FIS received the world fee In the year In 2019, the $35 billion deal was part of a number of large mergers that year that combined banking technology providers with payment processors, closely linking the development of payment technology with banking services.

The CBDC Lab “is an effort by FIS to enter new markets,” said Tim Sloane, Vice President of Payments Innovation at Mercator Consulting Services. “These platforms are useful for nation states interested in developing their own fast payment networks or developing CBDCs.”