Crypto’s volatile nature discourages adoption | Mastercard’s CEO

2020-10-31 18:53

Mastercard’s chief executive Ajay Banga sides with CBDCs over crypto, saying that the latter’s volatility scares away new investors

While the financial service company has pledged to get 1 billion people connected to the banking system, the executive doesn’t see any major impact of cryptocurrencies in achieving the milestone.

Banga believes that Bitcoin is not an ideal instrument of financial inclusion, especially to the unbanked, due to its volatility. According to him, CBDCs are a more viable solution if virtual currencies are to be integrated into the financial inclusion landscape.

Crypto’s volatility is a stumbling block

Banga argues that the financially excluded populace requires inclusion services with currencies that are similar to standard fiat money. In this regard, Bitcoin and other cryptocurrencies are impractical. He added that the excluded population finds very little utility in using volatile assets instead of conventional currencies.

“Bitcoin per se is volatile in its valuation. 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. That’s a way to make them scared of the financial system.”

It has been previously argued that cryptocurrencies such as Bitcoin are an affordable solution for the unbanked population compared to transaction alternatives like lenders. To this, Banga explains that the cost advantage is erased by price fluctuations.

Central bank digital currencies are a practical solution

Mastercard’s global testing platform, meant to help banks assess their CBDC use cases, has been in the trial stage. The platform will also be useful in evaluating the operational frameworks for proposed digital currencies.

Banga, a proponent of CBDCs, proclaimed that CBDCs are the way forward even though they are yet to be adopted widely.

“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,” he said.

The post Crypto’s volatile nature discourages adoption | Mastercard’s CEO appeared first on Coin Journal.

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crypto mastercard volatile nature ceo discourages adoption

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