Mastercard, a global payments giant, has expressed skepticism about the widespread adoption of Central Bank Digital Currencies (CBDCs), citing consumer comfort with existing monetary systems, according to CNBC. Ashok Venkateswaran, Mastercard’s lead for blockchain and digital assets in the Asia-Pacific region, emphasized the challenges in adopting CBDCs.
Venkateswaran says the key difficulty lies in ensuring that CBDCs can be spent anywhere, akin to cash. This notion challenges the current momentum in the digital currency space, where many countries are exploring or have already launched digital versions of their currencies.
The complexities of integrating CBDCs into existing systems
Despite Mastercard’s reservations, the company has actively engaged in the CBDC conversation through its CBDC Partner Program, involving notable industry players like Ripple, Fireblocks, and Consensys. The program aims to foster discussions among key stakeholders in the CBDC space. This initiative coincides with a growing interest in CBDCs globally, with around 130 countries, accounting for 98% of the global GDP, researching or considering CBDCs, a significant increase from only 35 in May 2020.
The development and adoption of CBDCs represent a significant shift in the global financial landscape. The International Monetary Fund (IMF) regards CBDCs as a “safe and low-cost alternative” to traditional cash. As of June, only 11 countries have adopted CBDCs, with another 53 in advanced planning stages, and 46 researching the concept.
Mastercard’s pilot projects and future outlook
Mastercard recently completed a pilot in Hong Kong’s CBDC initiative, showcasing the potential use of CBDCs for real-world asset transactions and Web3 marketplaces. However, Venkateswaran notes that while central banks are increasingly innovative and collaborative with private companies like Mastercard, the justification for CBDCs remains limited due to consumer preference for existing monetary forms.
In specific cases like Singapore, where the payment system is already efficient, Venkateswaran sees limited appeal for retail CBDCs but potential in wholesale CBDCs for interbank settlements. This nuanced view aligns with the IMF’s observations on countries like Singapore and Thailand, which have made strides in connecting fast payment systems, thus reducing cross-border transaction fees.
Mastercard’s stance on CBDCs underscores the complexity of introducing new forms of digital currency into existing financial ecosystems. Despite its cautious outlook, the company’s involvement in various CBDC projects reflects an understanding of the transformative potential of digital currencies while acknowledging the challenges in their broad adoption.
