Ashok Venkateswaran, Mastercard’s head of blockchain and digital assets for Asia Pacific, expressed skepticism about the widespread adoption of central bank digital currencies (CBDCs).
This comes as countries around the world explore CBDCs, with only 11 having adopted them, 53 in advanced planning and 46 researching the topic as of June, according to data from the Atlantic Council.
Mastercard Highlights Challenges to CBDC Adoption
At the Singapore FinTech Festival, Ashok Venkateswaran expressed reservations about the widespread adoption of CBDCs, citing the lack of sufficient justification as a significant barrier, making wide adoption “difficult.”
He highlighted the challenge of adopting CBDCs, saying: “The difficult part is adoption. So, if you have CBDCs in your wallet, you should have the flexibility to spend them wherever you want – much like cash today. “
Despite the International Monetary Fund (IMF) referent to CBDCs as a “safe, low-cost alternative” to cash, Venkateswaran argued that consumers are comfortable with traditional forms of money, leading to insufficient justification for the adoption of CBDCs.
He also acknowledged the time and effort needed to build the infrastructure needed for CBDCs, highlighting collaborative efforts between central banks and private companies like Mastercard.
Venkateswaran’s take on Singapore’s plan to pilot CBDCs
The central bank of Singapore recently announced plans testing wholesale CBDCs starting in 2024. During this trial, the Monetary Authority of Singapore will collaborate with domestic banks to test the use of wholesale CBDCs to facilitate domestic payments.
However, Venkateswaran cited Singapore as an example where the case for a retail CBDC is not compelling due to the city-state’s highly efficient payments system.
He stressed the importance of understanding the specific needs of each country, saying: “It really depends on the needs of the country or the problem they are trying to solve.” He cautioned against adopting CBDCs solely to replace existing national payment networks, suggesting that it makes sense in countries where the national payment network is less robust.
Meanwhile, Mastercard recently completed testing its solution under the Hong Kong Monetary Authority’s e-HKD pilot program, simulating the use of a retail CBDC. The pilot involved 16 companies from the finance, payments and technology sectors.