The general manager of the Bank for International Settlements (BIS), Agustin Carstens, has called on countries to modernize their existing legal frameworks to ensure legitimacy, privacy, integrity, and choice for central bank digital currencies (CBDCs).
Speaking at a conference in Switzerland on Wednesday, Carstens said that CBDCs are a form of money that meets the needs and expectations of the public and that it is unacceptable that unclear or outdated legal frameworks could hinder their deployment.
“CBDCs are not just a technical issue. They are also a legal issue. They require a solid legal foundation,”
According to a 2020 paper by the International Monetary Fund (IMF), around 80% of central banks are either not allowed to issue a CBDC under existing laws or have legal frameworks that lack clarity on this matter.
Carstens said that this needs to be rectified and that countries should set up legal frameworks that support the issuance and provision of access to CBDCs by the central bank and potentially involved third parties.
He also said that CBDCs should respect the principles of monetary sovereignty, financial stability, monetary policy effectiveness, and international cooperation.
Carstens added that central banks around the world have been investing in exploring and addressing both the technical and operational requirements of a CBDC.
In 2022, 93% of central banks were engaged in some form of CBDC work, a BIS survey showed.
The BIS itself has conducted multiple CBDC experiments and has called for countries to collaborate on their CBDC designs.
Carstens concluded by saying that CBDCs are an opportunity for central banks to innovate and serve the public better but that they also pose significant challenges and risks that need to be carefully managed.
