Bitcoin cannot function as an inclusive currency for the unbanked due to its volatility, Mastercard CEO Ajay Banga said during Tuesday’s Fortune Global Forum conference. He also cited a lack of knowledge about who is behind the cryptocurrency as concerning.
“I am not a believer in the volatility or, for that matter, the absence of transparency in who is the person who’s involved with that currency. So, that’s why central bank digital currencies, we’re believers in.”
Banga also revealed that Mastercard has a significant patent library relating to CBDCs, which may help explain why he’s so positive towards them.
Asked about Bitcoin (BTC) as a potential solution to financial inclusion, Banga claimed that the cryptocurrency doesn’t fulfill the requirements for the unbanked, using a bizarre example about Coke bottles to illustrate 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.”
He believes that if fiat currencies were to go digital they would “help with cross-border traded flows,” however, he added that “financial inclusion for individuals is a very different thing.”
He has held a strong view against the opacity of cryptocurrencies for years calling any non-government mandated cryptocurrencies junk in 2017, and even comparing them to “snakes” in 2018, saying that they don’t “deserve” to be considered a medium for exchange.
However, Mastercard has publicly stated it is open to state-issued digital currencies.
And in 2019, Mastercard appeared to be taking a more open stance towards cryptocurrencies by being one of the founding members of Facebook’s Libra project. But in October last year, the payment provider left the project along with Visa, Stripe, and Paypal, citing a lack of transparency among the core reasons for its departure.
Putting its money where its mouth is, the CEO confirmed that Mastercard has “invested a considerable amount of money” in CBDCs, adding:
“Today, we’re one of the largest patent holders in the space of central bank digital currencies.”
The CBDC sandbox released in September this year by Mastercard, Banga stated, allows for central banks and commercial banks to explore CBDCs together for use-cases like “cross-border transactions flows.” The tool simulates various types of transaction environments to let central banks evaluate CBDC use cases. It is still unclear which banks are using the tool.