Mastercard CEO Ajay Banga believes that cryptocurrencies such as Bitcoin can’t help the unbanked due to its extreme volatility. The CEO of one of the world’s largest payment providers first made the remark at the Fortune Global Forum conference on Oct. 27, 2020.
Bitcoin’s Volatility Doesn’t Allow Financial Inclusion
Ajay claims that cryptocurrencies don’t help towards the greater financial inclusion of everyone while citing an example with Coke bottles with 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.”
Banga adds that the value of any cryptocurrencies fluctuates by large amounts. Just this year, one unit of Bitcoin swung from less than $5,000 in March to nearly $14,000 this week.
Banga had always been vocally against cryptocurrencies for years. He even called them ‘junk’ back in 2017. Also comparing it to ‘snakes’ in 2018, saying it doesn’t even deserve to be considered as a medium of exchange. However, the CEO is quite positive towards state-issued virtual currencies.
In 2019 Mastercard took the road towards stablecoins by being one of the founding members of Facebook’s Libra project. Although, seven months later, Mastercard took to bidding adieu the Libra project along with Visa, Stripe, and Paypal, citing a lack of transparency among one of the reasons for departure.
CBDCs Are a Much Preferred Choice: Ajay Banga
Meanwhile, Banga hasn’t completely dished out virtual currencies altogether. The CEO believes that central bank digital currencies are a much preferred and stable choice due to its backing by the country’s fiat currencies, adding:
“Fiat currencies, if they were to go digital, would they be helpful in cross-border trade flows and improving the efficiency of those—yes for sure.”
Banga had also revealed that Mastercard has a significant patent library relating to CBDCs. Released in September 2020, The CBDC sandbox allows for central banks and commercial banks to explore CBDCs together for use-cases like “cross-border transactions flows.” Although, it’s still unclear which banks are currently using the tool.