Mastercard’s expert, Ashok Venkateswaran, has expressed skepticism regarding the current viability of widespread central bank digital currencies (CBDCs). According to CNBC, Venkateswaran, Mastercard’s Blockchain and Digital Assets Lead for Asia-Pacific, discussed the complexities surrounding the implementation of CBDCs during the Singapore FinTech Festival. He emphasized that for CBDCs to be successful, they must be as accessible and spendable as traditional cash.
Adoption Difficulties
“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,” said Venkateswaran. However, the implementation of CBDCs necessitates substantial infrastructure development, which is a time-consuming and investment-intensive process.
“[Building infrastructure to facilitate that] takes a lot of time and effort on the part of the country to do that. But a lot of the central banks nowadays have gotten very innovative because they are working very closely with private companies like ours to create that ecosystem,” said Venkateswaran.
Limited Implementation Rate
While 130 countries, representing 98 percent of the global economy, are exploring central bank digital currencies, only 11 have fully launched a digital currency, according to the Atlantic Council. Even if a CBDC were introduced, Venkateswaran claims that consumers would remain comfortable using traditional money, and there isn’t sufficient justification for having a CBDC.
“[Consumers] are so comfortable using today’s type of money” that “there isn’t enough justification to have a CBDC,” Venkateswaran claimed.
Despite the challenges, the International Monetary Fund Managing Director, Kristalina Georgieva, believes that CBDCs offer a safe and low-cost alternative to cash, especially in island economies where cash distribution can be costly. On November 7, Mastercard announced the successful completion of the Hong Kong Monetary Authority’s e-HKD Pilot Program, demonstrating its capability to power or assist in launching digital currencies like e-HKD.
