There is currently not enough reason for most consumers to switch from paper money to central bank digital currencies (CBDCs), making mainstream adoption an uphill battle, argued Mastercard’s Ashok Venkateswaran.
With consumers already comfortable using physical cash, Venkateswaran believes there must be a compelling use case for them to adopt CBDCs en masse. He cited potential exceptions like countries lacking robust existing digital payments infrastructure.
Mastercard tested CBDC technology in Hong Kong’s recent e-HKD pilot. But when looking at advanced economies like Singapore with efficient payment systems, Venkateswaran sees little justification currently for a retail CBDC.
While the promises of programmability and embedded policies make CBDCs intriguing, the convenience of the paper currency means the burden of proof is still on digital currencies to show transformative new use cases to drive consumer uptake.
Without that, Mastercard cautions that CBDC adoption at scale will remain difficult despite growing experimentation from central banks. The takeaway – digital currencies must solve real problems, not just replace existing systems.
