Mastercard’s View on Central Bank Digital Currencies

Mastercard’s blockchain and digital assets lead for Asia-Pacific, Ashok Venkateswaran, is doubtful about the widespread adoption of central bank digital currencies (CBDCs).

According to data from the Atlantic Council, only 11 countries have adopted CBDCs, while 53 are in advanced planning stages, and 46 are researching the topic as of June.

Challenges in CBDC Adoption

During the Singapore FinTech Festival, Ashok Venkateswaran expressed reservations about the widespread adoption of CBDCs, citing the lack of sufficient justification as a significant hurdle, making broad adoption “difficult.”

He emphasized the challenge of CBDC adoption, stating, “The difficult part is adoption. So, if you have CBDCs in your wallet, you should have the ability to spend it anywhere you want – very similar to cash today.”

Venkateswaran argued that consumers are comfortable with traditional forms of money, leading to insufficient justification for CBDC adoption, despite the International Monetary Fund (IMF) referring to CBDCs as a “safe and low-cost alternative” to cash.

He also acknowledged the time and effort required to build the necessary infrastructure for CBDCs, noting the collaborative efforts between central banks and private companies like Mastercard.

Venkateswaran’s Take on Singapore’s Plan to Pilot CBDCs

Singapore’s central bank recently announced plans to pilot wholesale CBDCs from 2024. During this trial, the Monetary Authority of Singapore will collaborate with domestic banks to test the use of wholesale CBDCs for facilitating domestic payments.

However, Venkateswaran cited Singapore as an example where the case for retail CBDC is not compelling due to the city-state’s highly efficient payment system.

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He emphasized the importance of understanding the specific needs of each country, stating, “It really depends on the need of the country or what problem they are trying to solve.” He cautioned against adopting CBDCs solely to replace existing domestic payment networks, suggesting that it makes sense in countries where the domestic payment network is less robust.

Meanwhile, Mastercard recently completed testing its solution in the Hong Kong Monetary Authority’s e-HKD pilot program, simulating the use of a retail CBDC. The pilot involved 16 companies across the financial, payments, and technology sectors.

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By Team