CEO Ajay Banga disclosed in the interview his concerns about compliance, monetization, and wallets. He said that his concerns were not only related to compliance but also about the whole business model.
Ajay Banga raised three major issues
While talking to the Financial Times, Ajay Banga pointed out three major issues regarding the Libra project. Firstly, he raised the issue of compliance with laws. By referring to know your client, money laundering, and data management processes, he said that the leaders or members of Libra would not commit to the local laws. He stated:
“Every time you talked to the main proponents of Libra, I said ‘Would you put that in writing?’ They wouldn’t.”
The second issue that he raised was about how Libra would make money. Ajay Banga questioned the ways in which Libra plans to make money and feared that these would be the unprincipled ways. He said in the interview: “When you don’t understand how money gets made, it gets made in ways you don’t like.”
After that, the chief executive talked about Facebook’s plan to store the coins into its Calibra digital wallets. He said that this sudden shift from altruistic to Calibra wallet does not sound right. He asserted: “It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right.” He further said:
“If you get paid in Libra which go into Calibras, which go back into pounds to buy rice, I don’t understand how that works.”
Mastercard CEO took these issues seriously and therefore, he has withdrawn from Facebook’s Libra. Apart from Mastercard, other partners such as PayPal, Visa, and eBay have also dropped out from Libra.