BIS Chief Agustin Carstens Urges Legal Clarity for CBDCs
Agustin Carstens, General Manager of the Bank for International Settlements (BIS), underscores the importance of creating robust legal frameworks to support the implementation of central bank digital currencies (CBDCs).
He emphasizes that alongside technological advancements, legal clarity is vital for trust and functionality in digital currencies.
Agustin Carstens, the general manager of the Bank for International Settlements (BIS), has urged countries to create robust legal frameworks to facilitate the adoption of central bank digital currencies (CBDCs) – in a recent statement.
At the Switzerland conference, he stressed that alongside technology, legal frameworks are crucial for building trust, ensuring functionality, and gaining acceptance for digital currencies like CBDCs.
He also asserted that the public rightfully expects and demands modern forms of currency that align with their evolving financial needs and expectations.
Citing a 2020 paper from the International Monetary Fund, he highlighted that approximately 80% of central banks worldwide either lack the legal authorization to issue CBDCs under current laws or operate within legal frameworks characterized by ambiguity in this regard.
“The public rightly demands forms of money that meet their needs and expectations. Central banks have a mandate to meet those demands and have made significant investments to address the technical and operational requirements for CBDCs,”Carstens stated.
Proliferation of CBDC Initiatives and the Urgent Need for Legal Clarity
Most central banks worldwide have been actively exploring the technical and operational needs of CBDCs, with a 2022 BIS survey indicating that 93% of them are involved in CBDC-related projects.
According to Carstens, the primary step in addressing CBDCs involves a national conversation within each country. Different legal systems have varying approaches to CBDCs, and it’s the responsibility of each jurisdiction to determine whether to issue digital currencies and how to balance the rights and responsibilities of their users at the national level.
Local legal frameworks, cultural factors, and traditions often influence decisions. While some countries are rapidly transitioning to being cashless, others continue to rely on cash, Carstens argued.
Simultaneously, international coordination and cooperation are crucial. He said, “It would be unfortunate if we ended up with a fragmented system and legal framework in which different digital currencies don’t interoperate.”
Agustin Carstens firmly expressed his dissatisfaction with the prospect of unclear or outdated legal frameworks impeding the deployment of central bank digital currencies.
“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,”he said.
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