While the likes of PayPal and other traditional payment facilitators start to look at Bitcoin as a viable option in their arsenal of offerings, the CEO of Mastercard is still uncertain on the power of the digital asset, especially in regards to helping the unbanked.
Bitcoin has been touted as a way for those who do not have the same access to banks and other payment gateways to use a digital currency. However, for Ajay Banga, there are major issues with volatility and transparency with the major cryptocurrency.
However, Banga is eyeing out the growing excitement around Central Bank Digital Currencies and sees a much brighter future there. Mastercard, while doing a lot in terms of blockchain and even cryptocurrencies, has labelled non-government mandated cryptocurrencies junk in 2017.
High volatility
Bitcoin is still famed for its volatility and has been known to fall and rise in price in mere hours. This is one criticism towards the coin that makes it less successful as a digital cash, and more of a digital asset.
Speaking at Fortune Global Forum conference, Banga said:
“I am not a believer in volatility or, for that matter, the absence of transparency in who is the person who’s involved with that currency. So, that’s why central bank digital currencies, we’re believers in.”
Asked about Bitcoin as a potential solution to financial inclusion, Banga claimed that the cryptocurrency doesn’t fulfil the requirements for the unbanked, using an example about Coke 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 Coca-Cola bottles today and 21 tomorrow? That’s not a way to get them included. That’s a way to make them scared of the financial system.”
Driving CBDCs
Instead of going after the Bitcoin market like PayPal has decided to do, Mastercard is proud of its involvement of driving CBDCs and has said Mastercard has “invested a considerable amount of money” in CBDCs, adding:
“Today, we’re one of the largest patent holders in the space of central bank digital currencies.”
In September, Mastercard also announced a sandbox that allows for central banks and commercial banks to explore CBDCs together for use-cases like “cross-border transactions flows.” The tool simulates various types of transaction environments to let central banks evaluate CBDC use cases.
