Ashok Venkateswaran, Mastercard’s Asia-Pacific head of blockchain and digital assets, has raised significant concerns about the global adoption of central bank digital currencies (CBDCs).

Despite the fact that 11 countries have already launched their own CBDCs and many others are exploring or planning similar initiatives, Venkateswaran questions the practicality and rationale behind their widespread adoption.

Challenges in Implementing CBDCs

At the Singapore FinTech Festival, Venkateswaran expressed skepticism about the likelihood of CBDCs achieving global acceptance. He cited a lack of compelling reasons and the complexities involved as major barriers to their adoption.

He compared the challenges of adopting CBDCs to those faced with traditional cash, stating, “CBDCs in your wallet should be as spendable as cash is today.” Despite the International Monetary Fund’s (IMF) endorsement of CBDCs as a safer, cost-effective alternative to cash, he remains cautious.

Venkateswaran emphasized the substantial efforts required to establish a robust CBDC infrastructure, including cooperation between central banks and corporations like Mastercard.

Singapore’s CBDC Pilot

The Monetary Authority of Singapore’s initiative to pilot wholesale CBDCs from 2024, in collaboration with local banks, has generated widespread debate.

Venkateswaran offers a critical perspective, suggesting that Singapore’s already efficient payment system might not benefit significantly from a retail CBDC. He emphasizes the need for CBDC adoption to be tailored to the specific needs and financial infrastructure of each country.

Mastercard’s Role in Hong Kong’s e-HKD Pilot

Mastercard has been actively involved in developing CBDC solutions, notably in Hong Kong. The company participated in the Hong Kong Monetary Authority’s e-HKD pilot, involving 16 companies from finance, payments, and technology sectors.

This project was aimed at testing retail CBDC applications and demonstrated Mastercard’s commitment to exploring CBDCs in various economic contexts.

Global Trends in CBDC Exploration

The Atlantic Council reports a significant global surge in CBDC exploration, with 130 countries, representing 98% of the world’s GDP, investigating the creation of their own CBDCs, a notable increase from just 35 countries in May 2020. However, only 11 countries have successfully implemented a digital currency so far.

Venkateswaran highlights the extensive commitment required from nations to develop the necessary CBDC infrastructure. This involves more than technological implementation; it requires a fundamental shift in the financial ecosystem.

Mastercard’s recent completion of the Hong Kong CBDC pilot program showcased the practical applications of digital currencies, including their use in real-world asset transactions and Web3 marketplaces.

This pilot, indicative of a broader trend identified by Bank of America research, forecasts the emergence of CBDCs, though their widespread implementation may not be imminent.