According to Ashok Venkateswaran, the blockchain and digital assets lead for Asia-Pacific at Mastercard, the greatest challenge related to central bank digital currencies is getting consumers to adopt them. He told CNBC that people are content with the type of money they presently use, so there is no compelling reason to transition to a CBDC. Venkateswaran did mention, though, that in countries where the domestic payment network is not well-developed, it might make sense to switch to this form of currency.
Ashok Venkateswaran, Mastercard's blockchain and digital assets lead for Asia-Pacific, indicated on Wednesday at Singapore FinTech Festival that the widespread adoption of central bank digital currencies (CBDCs) is at present difficult to justify. He pointed to CBDCs being an alternative to cash and the International Monetary Fund's stated view that they are a safe and low-cost alternative - with around 60% of countries globally exploring CBDCs - but also highlighted the need for countries to invest considerable time and effort into creating the necessary infrastructure in order for them to be used. He added that consumers also are comfortable using existing forms of money and thus CBDCs do not have enough justification right now. Mastercard, for its part, has completed testing of its CBDC solution in the Hong Kong Monetary Authority's e-HKD pilot program, which simulates the use of a retail CBDC such as electronic Hong Kong dollars.
The participation of 16 entities from the financial, payments and technology sectors, including Mastercard, Visa, HSBC Bank and Hang Seng Bank, was seen during the pilot. Venkateswaran pointed to Singapore as an example of not needing retail CBDCs, as the city-state has an "efficient" payments system. Last year, the IMF's deputy managing director stated that Singapore and Thailand are the countries in Asia which have made "fast progress" by connecting rapid payment systems and reducing cross-border payments' fees. According to Venkateswaran, there is no need for a retail CBDC in Singapore, but rather for a wholesale CBDC for interbank settlements. On Thursday, Singapore's central bank declared that they intend to pilot live issuance and use of wholesale CBDCs in 2024.
Ravi Menon, the managing director of the Monetary Authority of Singapore, announced that the organization will work with regional banks for a trial period, during which wholesale Central Bank Digital Currencies (CBDCs) will be used to conduct domestic payments.Venkateswaran of Mastercard commented that this depends on the country's requirements and the objectives of the venture.He further said that it is not prudent to just substitute an existing home payment system but if the national network is not as efficient, introducing a CBDC might be a feasible solution.
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