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Mastercard’s Ashok Venkateswaran highlighted the challenges of CBDC adoption and argued that the case for widespread use of CBDCs is weak at the Singapore Fintech Festival.

The IMF considers CBDCs to be a safe, cost-effective alternative to cash, with 60% of countries exploring them but only 11 having fully adopted them.

MasterCard has stepped up its efforts in the CBDC space, inviting blockchain and cryptocurrency companies to collaborate on its central bank digital currency initiatives.

In the digital finance sector, discussions around central bank digital currencies (CBDCs) have taken center stage. Ashok Venkateswaran, head of blockchain and digital assets for Asia Pacific at Mastercard, recently expressed skepticism about the widespread adoption of CBDCs at the Singapore Fintech Festival, especially in regions with strong payment systems.

His comments reflect a cautious approach to the adoption of these digital assets.

Mastercard executive: CBDC adoption is a complex issue

Retail CBDC is a digital counterpart to traditional fiat currencies, designed to meet the daily transaction needs of individuals and businesses. Wholesale CBDC stands in stark contrast to this concept, as financial institutions will want to use it for high-value transactions.

Although the International Monetary Fund (IMF) has endorsed CBDCs as a safe, low-cost alternative to cash, widespread adoption remains a complex issue.

Venkateswaran explained,

“The hard part is adoption. So if you have a CBDC in your wallet, you should have the ability to spend it wherever you want, very similar to cash today.”

The International Monetary Fund reports that about 60% of countries around the world are exploring the concept of CBDCs. However, only 11 countries have fully adopted them. Venkateswaran stressed that although many central banks are becoming more innovative and working with private companies such as Mastercard, building the necessary infrastructure for CBDCs still requires a lot of time and effort.

Venkateswaran also noted that consumers prefer traditional forms of money such as notes and tokens. He also said that where existing payment systems are efficient, there is not enough reason to use CBDC.

He cited Singapore as an example.

“There is no case for a retail CBDC in Singapore, but there is a case for a wholesale CBDC for interbank settlements.”

A balancing act between privacy and convenience

Mastercard itself is also actively involved in the CBDC space. The company has completed testing of its solutions in the Hong Kong Monetary Authority’s e-Hong Kong dollar pilot program and is working to promote collaboration through its CBDC Partner Program.

The initiative aims to bring together blockchain technology and payment service providers, with a focus on developing blockchain-based currencies.

Mastercard’s efforts in the CBDC space. Source: Mastercard

The CBDC industry is evolving, with countries at different stages of exploration and adoption. Some see CBDCs as a step forward in the digitization of currency. However, others have expressed concerns about privacy and the degree of state control over financial transactions.

A delicate balance between innovation, consumer preferences, regulatory considerations, and the specific financial needs of each country will likely shape the future of CBDCs. #MasterCard  #CBDC