BIS Chief Urges Countries To Modernize Legal Frameworks For CBDCs
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The Bank for International Settlements (BIS) general manager, Augustin Carstens, has urged countries to modernize the legal frameworks around central bank digital currencies (CBDCs).
The executive wants these legal frameworks modernized to boost legitimacy, privacy, integrity, and the choice of CBDCs.
BIS Chief Urges Countries To Modernize Legal Frameworks For CBDCs
A paper published by the IMF in 2020 revealed that nearly 80% of central banks were not allowed to issue a CBDC under the current guidelines or operate within an unclear legal framework.
Carstens has opined that the lack of a legal framework around CBDCs was an issue that must be rectified. The general manager also noted that the public demanded different forms of money that met the changing needs and expectations.
According to Carstens, central banks needed to meet these demands. He also said that these institutions needed to make a significant investment and address the technical and operational demands around CBDCs.
“It is simply unacceptable that unclear or outdated legal frameworks could hinder their deployment.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,” Carstens said.
Carstens has also opined that countries operate using different legal frameworks, cultures, and traditions. According to him, these countries would likely address the matter differently.
He also opined that global coordination and cooperation were vital to adopting CBDCs. This collaboration would ensure that countries do not have fragmented systems and a legal framework where digital currencies are not interoperable.
BIS Survey On CBDCs
It is not the first time that the BIS has shown interest in CBDCs. In July, the institution published the results of a 2022 survey of CBDCs. It noted that over 50% of central banks were running concrete experiments on CBDCs or working on a pilot.
The survey also showed that the number of central banks involved in some form of CBDC work had increased to 93%. It also demonstrated that the work on retail CBDCs was more advanced than wholesale CBDCs.
The survey also demonstrated that most central banks saw potential value in having retail CBDCs and a fast payment system. It further predicts that 15 retail CBDCs and nine wholesale CBDCs will be under circulation in 2030. The survey also shows that stablecoins and other crypto assets are rarely used to make payments outside the crypto industry.
