MasterCard CEO Ajay Banga has said that Bitcoin will not help people who are excluded from the banking system. That is, the unbanked, because their volatility is terrifying.
Certainly, the executive expressed his position on cryptomoney, during the Global Fortune 2020 conference. That took place 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 around the world lack access to formal financial services.
They are therefore known as the “unbanked”. As a result, these people are excluded from traditional banking systems.
In this regard, Ajay Banga said:
“Crypto currencies, in general, will not help the insertion of people not included in the banking system. Specifically, in the payment systems and banks”.
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Ajay Banga and financial inclusion
Basically, Ajay Banga’s opinion is that assets like Bitcoin will not generate a significant boost to financial inclusion.
According to the CEO, the high volatility is detrimental to the cryptosystems. He also pointed out that the value of Bitcoin fluctuates in large amounts. He emphasized 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, indeed, the absence of transparency about who is involved with that currency. So that’s why we believe in central banks’ digital currencies.
For his part, the CEO of MasterCard explains that in order to achieve financial inclusion, digital currencies that behave like conventional money are needed. A feature that he believes Bitcoin doesn’t fulfill due to its high volatility.
In a way, Banga stated that Bitcoin (BTC) does not meet the requirements for the unbanked. He used an example about Coca Cola bottles to illustrate their price volatility:
“Can you imagine someone who is financially excluded from trading. So that he is included through a currency that could cost the equivalent of two bottles of Coca Cola today and 21 tomorrow?”
He also added: “That’s not a way to include them. That’s a way to make them afraid of the financial system.
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In fact, five years ago, the CEO of MasterCard embarked on a mission. And so, to help half a billion people around the world gain access to the financial system and banking services.
This year, the plan has been updated to one billion. In fact, taking into account the African and Asian continents.
According to Banga, people without bank accounts suffer from lack of access to credit. And they pay much higher fees for financial transactions through lenders.
Ajay Banga’s views on crypto currencies
For Mastercard’s CEO, crypt coins “do not deserve to be considered as a means of exchange”.
In 2017, Banga said, he would only support the use of crypto-currencies created by governments.
By contrast, in 2019, MasterCard showed a more open stance toward the Stablecoins. By being one of the founding members of the Libra project on Facebook. But months later it abandoned the plan. Citing a lack of transparency among the main reasons for his departure.
Today, Ajay Banga supports the idea held by many banking sector executives and central bank authorities around the world. According to which digital currencies are the way forward, in the framework of the payment digitalization process.
According to a press release from MasterCard, the company agrees with what central banks developing digital currency projects are saying:
“CBDCs are designed to have a value equivalent to a nation’s paper currency. And they are subject to the same government-backed guarantees.
Interestingly, despite Ajay Banga’s comments about Bitcoin, since last July MasterCard has been facilitating reloads and purchases with crypto-currencies in Europe. Through Wirex services.
To conclude, in September MasterCard created a test mechanism. To help central banks develop digital currencies.
I say goodbye with this phrase from Ajay Banga: “Fiduciary currencies, if they were to become digital, would be useful in cross-border trade flows”.