Sachin Mehra, the Chief Financial Officer of Mastercard, feels that cryptocurrencies like bitcoin and ether are still too volatile to be categorised as a suitable payment mechanism. Alternatively, central bank digital currencies (CBDCs) and stablecoins might fulfil this function.
Recently, various leaders of the payment services behemoth have shown a pro-cryptocurrency position, and the firm has signed numerous collaborations that allow digital asset solutions for consumers.
Crypto is a Class of Assets, Not a Payment Method
Mastercard’s CFO, Sachin Mehra, is another director at the multinational technology company who is optimistic about the future of cryptocurrencies. In a recent interview with Bloomberg, he stated that digital currencies might facilitate the transition from cash to electronic settlement methods.
“On a worldwide scale, there is still a substantial amount of currency that has not been digitised,” he said. Despite highlighting the benefits of bitcoin and other currencies, Mehra believes they are still too unpredictable to be used by consumers as everyday payment instruments:
If the price of item swings daily, such as your Starbucks coffee costs $3 today, $9 tomorrow, and $1 the day after, this is problematic from a consumer’s perspective.
However, the executive categorised crypto as an asset class, but CBDCs and stablecoins might “possibly have a little longer runway” and act as payment instruments.
CBDCs will be a digital counterpart of government-backed fiat currency, issued and entirely regulated by central banks. As a result of this oversight, these financial goods will be highly centralised, and severe price fluctuations are not anticipated.
Stablecoins, on the other hand, are tokens whose value is pegged to another asset, often significant fiat currencies (such as the U.S. dollar) or precious metals (like gold). The third and fourth largest cryptocurrencies by market capitalization, USDT and USDC, respectively, are tied to the U.S. dollar.