Challenges in Implementing CBDCs Emphasized by Mastercard

Challenges in Implementing CBDCs Emphasized by Mastercard


Mastercard’s Ashok Venkateswaran Skeptical About CBDC Adoption

As countries globally explore central bank 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. So, if you have CBDCs in your wallet, you should have the ability to spend it anywhere you want – very similar to cash today.” Despite the IMF referring to CBDCs as a “safe and low-cost alternative” to cash, Venkateswaran argued that consumers are comfortable with traditional forms of money.

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.

Singapore’s Plan to Pilot CBDCs

Singapore’s central bank plans to pilot wholesale CBDCs from 2024. During the trial, the Monetary Authority 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.

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.

Additionally, 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 companies across the financial, payments, and technology sectors.

Hot Take: Implications of Mastercard’s Stance on CBDCs

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Mastercard’s skepticism about the widespread adoption of CBDCs, particularly regarding the lack of justification and challenges in infrastructure, suggests that the road to universal acceptance of CBDCs may be more complicated than initially 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.

Challenges in Implementing CBDCs Emphasized by Mastercard
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