'This doesn't sound right': Mastercard's CEO ditched Facebook's Libra after multiple red flags
- Mastercard's CEO withdrew from Facebook's Libra over concerns about compliance, making money, and wallets, he told the Financial Times.
- Ajay Banga dropped out because Libra's leaders wouldn't commit to observing laws, he couldn't see how the digital currency would make money, and he was shocked by Facebook's plan to store the coins in its Calibra digital wallets.
- "When you don't understand how money gets made, it gets made in ways you don't like," he said.
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Mastercard's CEO ditched Facebook's Libra because of his concerns about compliance, monetization, and the social-media titan's plan to insert itself into transactions, he recently told the Financial Times.
Ajay Banga signed up Mastercard to support Facebook's digital currency and network, but dropped out - along with Visa, eBay, PayPal, and other partners - last fall. One reason was Libra's leaders wouldn't commit to abiding by laws around knowing their clients, money laundering, and data management, he told the newspaper.
"Every time you talked to the main proponents of Libra, I said 'Would you put that in writing?' They wouldn't."
It was also unclear to Banga how Libra would generate revenue, stoking his fears that it would make money in unscrupulous ways. "When you don't understand how money gets made, it gets made in ways you don't like," he told the Financial Times.
Thirdly, Banga was concerned that Facebook was pitching Libra as a decentralized network powered by various partners, while planning for customers to store their coins in its digital wallet, Calibra.
"It went from this altruistic idea into their own wallet," Banga told the newspaper. "I'm like: 'this doesn't sound right.'"
Banga questioned how the network could be financially inclusive if people who are paid in Libra coins have to store them in Calibra wallets before converting back into dollars to buy goods. "I don't understand how that works," he said.
Facebook's Libra plans have faced intense scrutiny in recent months. EU competition regulators are probing them, and US lawmakers grilled CEO Mark Zuckerberg in October on subjects such as Facebook's handling of financial data, its cooperation with regulators, and why it wants to develop a substitute for the dollar.
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