Challenges in Implementing CBDCs Emphasized by Mastercard

Challenges in Implementing CBDCs Emphasized by Mastercard

Mastercard’s Ashok Venkateswaran Skeptical About CBDC Adoption

As countries universally explore monetary authority digital currencies (CBDCs), only 11 have adopted them, 53 are in advanced planning stages, and 46 are researching the topic as of June, according to the Atlantic Council. During the Singapore Fintech Festival, Ashok Venkateswaran, Mastercard’s blockchain and digital assets lead for Asia-Pacific, expressed skepticism about the widespread adoption of CBDCs.

Challenges in CBDC Adoption

Venkateswaran mentioned that the lack of sufficient justification could make widespread CBDC adoption difficult. He emphasized the challenge of CBDC adoption, stating, “The difficult part is adoption. And, if you have CBDCs in your wallet, you should have the  probable to spend it anywhere you want – very similar to cash today.” Regardless of the IMF referring to CBDCs as a “safe and low-cost alternative” to cash, Venkateswaran claimed that consumers are comfortable with traditional forms of money.

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

Singapore’s Intend to Pilot CBDCs

Singapore’s monetary authority intends to pilot wholesale CBDCs from 2024. During the trial, the Central Bank of Singapore will collaborate with domestic banks to test the use of wholesale CBDCs for facilitating domestic payments. 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 attempting 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.

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

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Hot Take: Implications of Mastercard’s Stance on CBDCs

Mastercard’s skepticism about the widespread adoption of CBDCs, particularly regarding the lack of justification and challenges in infrastructure, implies that the road to universal acceptance of CBDCs could be more complicated than at the beginning anticipated. As countries continue to explore and implement CBDCs, it becomes critical to consider the specific needs and challenges of each individual market, rather than assuming a one-size-fits-all approach to digital currency adoption.

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Owen Patter is a distinguished crypto analyst, accomplished researcher, and skilled editor, leaving a notable imprint on the cryptocurrency landscape. As a proficient crypto analyst and researcher, Owen delves into the intricate realms of digital assets, offering insights that resonate with a diverse audience. His analytical acuity is harmoniously paired with adept editorial skills, allowing him to transform complex crypto information into easily comprehensible content.

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