PayPal Holdings Inc. is helping central banks around the world develop sovereign digital currencies, President and CEO Daniel Schulman said during a Nov. 2 earnings call.
The company's decision to work cryptocurrency into its digital wallet and enable merchants to accept it revolves around making digital currencies easier to use, more commonplace and more stable, management said. A consumer storing bitcoin in his or her digital wallet will have the ability to pay an online merchant using that currency through PayPal's platform, which converts the coins to fiat currency at a step rate to resolve volatility and with no input from the merchant.
Rolling out existing cryptocurrencies to digital wallets may be a stepping stone to a future in which fiat currency exists in a digital form. PayPal plans to open the cryptocurrency transaction functionality to all 28 million of the merchants who use PayPal in 2021, Schulman said.
"[Central bank digital currencies], from my perspective and all my conversations, are a matter of when and how they're done, not if," Schulman said. "And I think that our platform, with its digital wallets and the scale that we have right now, can help shape the utility of those currencies."
Central banks have been cautious in exploring digital fiat. In October, Federal Reserve Chairman Jerome Powell said the Fed is studying whether to launch one, but he said cybersecurity and the stability of the financial system were the central bank's primary concerns given that the U.S. dollar is the world's reserve currency.
"We do think it's more important to get it right than to be the first," Powell said.