Mastercard Cautions on Adoption of CBDCs
Mastercard’s blockchain and digital assets lead for Asia-Pacific, Ashok Venkateswaran, expressed doubts about the widespread adoption of central bank digital currencies (CBDCs) during an interview at the Singapore FinTech Festival. He emphasized that there is not enough justification for the use of CBDCs on a large scale, particularly due to consumers’ high comfort levels with existing forms of money.
Key Points on CBDC Adoption
- Mastercard suggests that the current level of consumer comfort with traditional currency is a hurdle to widespread CBDC adoption.
- Developing the necessary infrastructure for CBDCs would require significant time and effort from countries.
- Countries with less robust domestic payments networks may find more advantages in adopting CBDCs.
- Mastercard believes CBDCs are more suited for interbank settlements and countries with less efficient payment systems.
CBDCs, being the digital form of a country’s fiat currency, still face challenges despite growing interest from several countries worldwide. Mastercard’s concerns are that the development of infrastructure for CBDCs might require significant time and effort from issuing countries. Venkateswaran also highlighted that in countries like Singapore, with advanced domestic payments networks, the case for adopting a retail CBDC is less compelling. Mastercard believes that CBDCs may be more suited for specific purposes such as interbank settlements, and it is actively working with central banks on CBDC projects to gain insight into use cases and implementation challenges.
Hot Take: Mastercard’s Stance on CBDC Adoption
Despite the potential benefits of central bank digital currencies, Mastercard believes that significant hurdles remain in terms of widespread adoption, especially in countries with robust financial systems like Singapore. The company continues its efforts to collaborate with central banks to study and understand CBDC implementation and usage, emphasizing the need for clear communication and infrastructure development to support the successful integration and adoption of CBDCs.
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