Agustin Carstens, the general manager of the Bank for International Settlements, a global bank, said on Wednesday that nations should establish legal frameworks that support the deployment of central bank digital currencies (CBDC).
In a speech delivered on September 27 at the BISIH-FSI conference in Switzerland, Carstens emphasized the urgent need to resolve legal obstacles impeding the advancement of CBDCs. The head of the BIS deemed it unacceptable that imprecise or out-of-date legal frameworks could hinder the implementation of CBDCs.
CBDCs framework is much needed – Agustin Carstens
According to Carstens, citing an International Monetary Fund (IMF) report, over 80% of central banks either lack the legal ability to issue digital money under current legislation or face uncertain legal limitations. According to him, this must be changed since the public expects money to meet their wants and aspirations.
First and foremost, a conversation needs to take place inside countries. Different legal systems approach these questions in different ways. It is for each jurisdiction to decide whether to issue CBDC and how to balance the rights and obligations of its users at a national level. The answer to these questions will often depend on the local legal framework, as well as on culture and traditions. Many countries are happily going cashless. For others, cash is still king.
Agustin Carstens
Carstens drew attention to the declining use of cash and the rising demand for alternative forms of currency. According to his speech, users increasingly pursue innovative monetary options that enable them to transact “across borders quickly, cheaply, and safely.”
He noted that this provided additional justification for central banks to develop CBDCs for use within their respective jurisdictions.
Despite the legal obstacles associated with CBDCs, a number of central banks have begun research and development on these digital currencies. The Committee on Payments and Market Infrastructures (CPMI) survey revealed that 93% of central banks were involved in CBDC-related initiatives last year. While some concentrated on CBDCs for wholesale interbank transfers, others concentrated on CBDCs for retail use.
What is the current global state of CBDCs?
He added that central banks across the globe have been investing in researching and addressing the technical and operational requirements of a CBDC. A BIS survey revealed that 93% of central banks were engaged in CBDC activity in 2022. The BIS has conducted multiple CBDC experiments and urged nations to collaborate on CBDC designs.
It is simply unacceptable that unclear or outdated legal frameworks could hinder their deployment. The work to address these issues needs to begin in earnest. And it needs to proceed at pace.
Agustin Carstens
The potential misuse of CBDCs in the enforcement of social credit scores was also addressed. According to Carstens, a CBDC requires a set of clearly defined rights and responsibilities in order to function.
The general manager of the BIS stated that it is essential to protect the privacy of CBDC users and their data, the integrity of the financial system, and the freedom of individuals to choose between CBDC and other forms of currency.
Carstens observed that the use of cash and adoption of digital payments vary from country to country and that a retail CBDC is likely to coexist with cash and commercial bank money:
A central bank that introduces a CBDC should increase the choices for society, not diminish them.
Agustin Carstens
As previously reported by Cryptopolitan, China is still driving the development and adoption of its digital yuan CBDC program. The most recent update to its experimental e-CNY app now allows visitors visiting China to pre-load their digital yuan wallets with Visa and Mastercard payments.
Meanwhile, in the United States, the CBDC Anti-Surveillance State Act, which prohibits the Federal Reserve from issuing a CBDC, was approved by the House Financial Services Committee on September 21. The bill will now be sent to Congress in order to combat “state control over currency.”
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