Ajay Banga: “Bitcoin cannot help those excluded from the banking systems”
MasterCard CEO Ajay Banga has expressed that Bitcoin will not help people excluded from the banking system. That is, the unbanked, because their volatility terrifies.
Certainly, the executive expressed his position on cryptocurrency, during the Global Fortune 2020 conference, which was held virtually on October 26 and 27.
It should be noted that according to the most recent Global Findex report from the World Bank, up to 1.7 billion people worldwide lack access to formal financial services.
Hence, they are known as the “unbanked.” As a consequence, these people are excluded from traditional banking systems.
In this regard, Ajay Banga, indicated:
“Cryptocurrencies, in general, will not help the insertion of people not included in the banking system. Specifically, in payment systems and banks ”.
Ajay Banga and financial inclusion
Basically, Ajay Banga’s opinion is that assets like Bitcoin will not generate a significant push towards financial inclusion.
According to the CEO, high volatility hurts cryptocurrencies. Also, he highlighted that the value of Bitcoin fluctuates in large amounts. Emphasizing, that this year alone, a BTC changed its dollar value from less than $ 5,000 in March, to almost $ 13,500 recently.
“I don’t believe in volatility or, really, in the absence of transparency about who is the person who is involved with that currency. So that’s why we believe in central bank digital currencies. ‘
For his part, the CEO of MasterCard explains that to achieve financial inclusion, digital currencies that behave like conventional money are needed. A characteristic that he believes Bitcoin does not meet due to its high volatility.
In a way, Banga claimed that Bitcoin (BTC) does not meet the requirements for the unbanked. Using an example of Coca Cola bottles to illustrate their price volatility:
“Can you imagine someone who is financially excluded negotiating. So that it is included through a coin that could cost the equivalent of two bottles of Coca Cola today and 21 tomorrow?“
He also added: “That is not a way to include them. That’s one way to make them fear the financial system”.
MasterCard’s mission
Actually, five years ago, the CEO of MasterCard embarked on a mission. And thus, help 500 million people around the world, to gain access to the financial system and banking services.
This year, the plan has been updated to a billion. In fact, taking into account the African and Asian continent.
According to Banga, people without bank accounts suffer from a lack of access to credit. And they pay much higher fees for financial transactions through lenders.
Ajay Banga’s views on cryptocurrencies
For the CEO of Mastercard, cryptocurrencies “do not deserve to be considered as a medium of exchange”.
In 2017, Banga commented, that he would only support the use of cryptocurrencies created by governments.
Instead, in 2019, MasterCard showed a more open stance towards Stablecoins. Being one of the founding members of Facebook’s Libra project. But months later he abandoned the plan. Citing a lack of transparency among the main reasons for his departure.
Currently, Ajay Banga supports the idea held by many banking executives and central bank authorities around the world. According to which digital currencies are the way to go, within the framework of the payment digitization process.
According to a press release from MasterCard, the company agrees with what central banks that develop digital currency projects say:
“CBDCs are designed to be worth the equivalent of a nation’s paper money. And they’re subject to the same government-backed guarantees”.
As a curious fact, despite Ajay Banga’s comments about Bitcoin, since last July MasterCard has facilitated top-ups and purchases with cryptocurrencies in Europe. Through Wirex services.
To conclude, in September MasterCard created a testing mechanism. To help central banks develop digital currencies.
I say goodbye with this phrase from Ajay Banga: “Fiat currencies, if they went digital, would be useful in cross-border trade flows”.
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