Mastercard CEO revealed the reasons for abandoning the Facebook Libra project

by Patrick Gon

The chief executive of the Mastercard corporation, Ajay Banga, attacked Facebook and its Libra cryptocurrency project by saying that he did not understand how money would be made with it and that the creation of the Calibra wallet was not in tune with the proposal to promote a currency of global reach.

Almost four months after the withdrawal of MasterCard from the Libra association , a conglomerate of companies that supported the Facebook initiative, the Indian executive questioned the events that occurred after the formation of the group and said that the regulatory issue and the model Business influenced the decision of the multinational company to step aside.

Quoted by the Financial Times newspaper, Banga noted that the members of the association would not commit to do nothing that did not comply fully with local laws and cited measures such as Meet Your Client (KYC), Money Laundering (AML) and the data management According to Banga, he would have directly asked the main promoters of Libra that if all these aspects would be established in writing and he said: “They would not.”

On the profitability of the project, Banga was blunt in saying that, not understanding how income would be generated, the work was going to be done in a way that he would not like, which precipitated the abandonment of the project. Although the CEO’s reasons are significant, there was an additional element that set off his alarms about the viability of the project. It is about the creation of the Calibra portfolio , a project that would be used to manage the funds of the participants.

In relation to this proposal, he said: “He went from this altruistic idea (of creating a global currency) to his own wallet and told me ‘this doesn’t sound good’. Banga said that if you really want to promote financial inclusion, then you have to offer instruments that can be understood and used to “buy rice” for example, so he added: “I don’t understand how that works.”

Data management

The reasons for the departure of MasterCard from the Libra Association would also be based on the integrity and data management of the participants. This, due to the scandal that triggered Facebook and the Cambridge Analytica company for the bad practices in the data management of 87 million users of the social network, which could be considered as one of the biggest episodes of violation of user privacy until date .

With this as a background and after questioning some of the main decisions that were made, not only Mastercard stepped aside. Other companies such as Visa, eBay and PayPal, among others, have said that, for the time being, they were withdrawing from the Libra project to concentrate on other business models.

It is not the first time that Banga refers to bitcoin or cryptocurrencies in general. In October 2017, the executive said that cryptocurrencies not created by governments are rubbish , but would support government initiatives to create new payment mechanisms controlled by states.

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