The CEO of MasterCard Explains Why the Firm Abandoned the Libra Association
On February 3 in an interview with the Financial Times, the CEO of MasterCard, Ajay Banga, talked about his worries concerning Libra. According to him, Libra lacks transparency and national payment systems are indeed stupid.
Facebook added MasterCard as a member of the Libra association, as well as Visa, PayPal and Stripe. They abandoned the association in October last year without appropriate explanation, while it was rumored that they feared running afoul of regulators.
It seems compliance is the major reason for the decision. The key members of the Libra association were reportedly uninterested in participating in whatever was not entirely compliant with local law. Banga mentioned anti-money laundering, know your customer, as well as data management regulation.
Banga also talked about the business model of Libra. There was no clarity about how the association would make money, and he mentioned that
“when you don’t understand how money gets made, it gets made in ways you don’t like.”
Banga said Libra was inconsistent with the way it presented itself. Libra presents itself as a financial inclusion tool while the utilization of wallet Calibra seems inappropriate to Banga. However, he is a supporter of a global currency.
The concept of nationalized payment networks exists and in recent times has started reclaiming traction as Central Bank Digital Currency (CBDC). According to Banga, there have been attempts to find a means of having national control over some forms of payments. He mentioned examples of the nations that have tried it: France, Australia, Brazil and Mexico.
Banga said local networks are responsible for the fragmentation of the transaction data required for analytic work. Hence, tracking crime has become further difficult where terrorists abound without respect to borders.
Featured image courtesy of Shutterstock. Source: Cryptopress.