BIS chief claims ‘outdated legal frameworks’ could ‘hinder’ CBDC development
Agustín Carstens argued that users were increasingly seeking innovative monetary options allowing them to transact conveniently.
Agustín Carstens, the Bank for International Settlements (BIS) general manager, urged governments to create a legal framework to ease the creation and introduction of Central Bank Digital Currencies (CBDC).
In a Sept. 27 speech delivered at the BISIH-FSI conference in Switzerland, Carstens emphasized the pressing need to address legal challenges obstructing the progress of CBDCs. The BIS chief found it unacceptable that unclear or outdated legal frameworks might impede the implementation of CBDCs.
Citing an International Monetary Fund (IMF) report, Carstens noted that nearly 80% of central banks either lack the legal authority to issue a digital currency under their current regulations or face unclear legal parameters. According to him, this must be rectified as the public demands forms of money that meet their needs and expectations.
Carstens pointed out the decline in cash usage and the growing demand for alternative forms of currency. Per his speech, users increasingly seek innovative monetary options allowing them to transact “across borders quickly, cheaply and safely.” He noted that this further justified central banks to develop CBDCs for use within their jurisdiction.
Despite the legal hurdles associated with CBDCs, several central banks have embarked on initiatives to research and develop these digital currencies. The Committee on Payments and Market Infrastructures (CPMI) survey revealed that 93% of central banks were involved in CBDC-related projects last year. While some focused on wholesale CBDCs for interbank transfers, others concentrated on retail CBDCs for public use.
Suggests legal framework for CBDCs
Meanwhile, Carstens outlined three fundamental considerations for countries working on a legal framework for CBDCs.
According to Carstens, countries must ensure the privacy and data protection of CBDC users, maintain the financial system’s integrity, and preserve users’ freedom to choose between CBDCs and other forms of currency. He noted that the introduction of CBDCs should expand choices rather than restrict them.
He concluded that:
“Central banks have a mandate to meet those demands and have made significant investments to address the technical and operational requirements for CBDCs. It is simply unacceptable that unclear or outdated legal frameworks could hinder their deployment.”