When Libra was first announced, it all appeared to be going swimmingly well for the Facebook digital asset. It had a number of big names on board, including Mastercard, which was one of the founding members of the Libra association, along with Visa, PayPal and Stripe.
And then things started to go wrong in October 2019, when these four all left without any explanation. Although the inquisition by US regulators might have had something to do with it! Now, Mastercard’s CEO Ajay Banga has explained his concerns about Libra in an interview with the Financial Times, where he lambasted Libra for its lack of transparency whilst arguing that national payment systems are “really stupid.”
According to the FT article, it appears that compliance might have been a leading cause for the split. He says that the Libra association’s key members refused to commit to “not do anything that is not fully compliant with local law.” Banga pointed specifically to anti-money laundering, know your client and data management regulation issues as part of that.
Mastercard was also concerned about Libra’s business model, because it wasn’t transparent about how it would make money. Banga said, “when you don’t understand how money gets made, it gets made in ways you don’t like.”
He also thought that Libra was inconsistent in the way it presented itself. He said: “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.”