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Bitcoin cannot function as an inclusive currency for the unbanked due to its volatility, Mastercard CEO Ajay Banga said at the Fortune Global Forum conference on Tuesday. He also cited the lack of knowledge about who is behind the cryptocurrency as worrying.
“I don’t believe in volatility or, for that matter, in the absence of transparency as to who is the person involved in that currency. So this is why we believe in central bank digital currencies. “
Banga also revealed that Mastercard has a significant patent library related to CBDCs, which may help explain why it’s so good about them.
When asked about Bitcoin (BTC) as a potential solution to financial inclusion, Banga said the cryptocurrency does not meet the requirements for unbanked, using a bizarre example on Coca-Cola bottles to illustrate its price volatility:
“Can you imagine someone who is financially excluded trading in a way to get included through a currency that could cost the equivalent of two bottles of Coca-Cola today and 21 tomorrow? That’s not a way to get them. [included]. This is a way to scare them away from the financial system. “
He believes that if fiat currencies were to go digital, “they would help with cross-border trade flows”, however, he added that “financial inclusion for individuals is a very different thing.”
He held a strong view against cryptocurrency opacity for years by calling any non-government cryptocurrency junk in 2017 and even comparing them to “snakes” in 2018, saying they don’t “deserve” to be considered a medium of exchange.
However, Mastercard has publicly stated that it is open to state-issued digital currencies.
And in 2019, Mastercard seemed to be taking a more open stance towards cryptocurrencies by being one of the founding members of Facebook’s Libra project. But in October last year, the payment provider left the project alongside Visa, Stripe, and Paypal, citing a lack of transparency as a major reason for its departure.
Putting his money where his mouth is, the CEO confirmed that Mastercard has “invested a significant amount of money” in CBDC, adding:
“Today we are one of the largest patent holders in the central bank’s digital currency industry.”
The CBDC sandbox released in September this year by Mastercard, Banga said, allows central banks and commercial banks to explore CBDCs together for use cases such as “cross-border transaction flows.” The tool simulates various types of transaction environments to allow central banks to evaluate CBDC use cases. It is not yet clear which banks are using the tool.
