Ajay Banga, the CEO of Mastercard revealed in an interview with the Financial Times, about his concerns about Libra and in particular its lack of transparency. Mastercard was one of the founding members of the Libra Association, along with Visa, PayPal and Stripe. But in October last year, all four companies withdrew. It is believed that the cause of this is due to the amounting pressure of regulators in the US and Europe.
This was revealed by the CEO of Mastercard stating that the main reason for the sudden decision to withdraw from the Libra Association was due to “not complying with local laws” regarding anti-money laundering, KYC and data management rules.
There is also another concern about Libra’s business model that does not clearly state how money was to be made. Including some inconsistent presentation methods, even though Libra positions itself as a financial inclusion tool, the use of the Calibra wallet doesn’t seem to sound right to him.
Banga does like the idea of a global currency and elaborated, “For financial inclusion, the government has got to pay you in this [currency], you’ve got to receive it as an instrument you can understand, and you have to be able to use it to buy rice and cycles. If you get paid in Libra [coin] […] which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works.”
Banga also mentioned concerns with the economic costs of creating siloed payment systems saying that “It is stupid, especially in a world where citizens travel globally, and where technology is completely global, is even three times more stupid.”
He brought up France, Australia, Brazil and Mexico, as cases of the countries’ governments trying to create a controlled national payment system stating that the idea is not new, but rather a fantasy that’s been going on for a long time now.