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Mastercard president and CEO Ajay Banga has broadly dismissed all non-governmental cryptocurrencies as ‘junk’ in a media interview.
Mastercard, the world’s second-largest payments company after Visa, was asked about the potential for disruption brought on by digital currencies. Powered by decentralized blockchain technology, the innovation presents a threat to the very business model of a singular operator of global payment rails, like Mastercard.
In an interview with the Economic Times, the Mastercard executive revealed the company would be receptive to a digital currency – if it is developed or mandated by a government. Unsurprisingly, Banga was scathing in his attack on state-agnostic cryptocurrencies like bitcoin, stating:
If the government creates digital currency, we will find a way to be in the game. We will provide rails for moving currency from customer to merchant. The government mandated digital currencies are interesting. Non-government mandated currency is junk.
Banga went on to attack bitcoin with the oft-heard rhetoric of volatility and its use (or abuse) in ransomware payments. To him, China’s crackdown on the cryptocurrency industry only adds to his arguments against bitcoin.
If I pay for a bottle of water in Bitcoin, one day it is two bottles for a Bitcoin the other day it is 9,000 bottles. This does not work. Any currency needs stability and transparency, otherwise you will get all the illegal activities in the world. Why was the ransom for the virus (wannacry ransomware) collected in bitcoin? Why has China cracked down on bitcoin?
Banga’s comments join the recent criticism leveled against bitcoin from Wall Street bankers and other figures of the traditional banking and financial industry. JP Morgan CEO Jamie Dimon labelled bitcoin ‘a fraud’ in a much-publicized rant last month. UBS Chairman and former Bundesbank president Axel Weber even admitted that his skepticism of bitcoin “probably comes from my background as a central banker” when he claimed bitcoin does not fulfill the functions of a currency.
A year ago, Mastercard president for operations and technology Rob Reeg revealed that the company is invested in blockchain technology, but not bitcoin.
It is an interesting technology and we are working on it. I personally don’t care about Bitcoin, but I do care about blockchain technology.
Featured image from Flickr/World Bank Photo Collection.