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BIS chief calls on countries to modernise legal frameworks to support CBDCs

BIS chief calls on countries to modernise legal frameworks to support CBDCs

BIS general manager Agustin Carstens has called on countries to modernise their existing legal frameworks in a way that ensures legitimacy, privacy, integrity and choice for central bank digital currencies.

According to an IMF paper published in 2021, close to 80% of central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is unclear.

"This needs to be rectified," says Carstens. "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. It is simply unacceptable that unclear or outdated legal frameworks could hinder their deployment.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 acknowledges that different countries have different legal frameworks, culture and traditions and will likely approach the problem in diverse ways.

Nonetheless, international coordination and cooperation is critical, he says: "It would be unfortunate if we ended up with a fragmented system and legal framework in which different digital currencies don't interoperate."

Comments: (3)

Nick Ogden
Nick Ogden - RTGS.global - London 27 September, 2023, 11:32Be the first to give this comment the thumbs up 0 likes

Augustin is spot on with his request. I have argued for a number of years that to improve Global Financial Stability needs a coordinated plan against a new model, not a domestic rehash of what we already have. Through coordinated regulatory action using modern and robust global infrastructure, that incidentally is already built, the global movement of money between commercial and central banks can be streamlined. The result would significantly improve every economy on the planet and, in my mind a very worthy prize. 


A Finextra member
A Finextra member 27 September, 2023, 12:311 like 1 like

Get with it! Citizens do NOT want a CBDC if it is programmable.  We already effectively have digital currency as a high proportion of payments are now done using digital cards.  The huge danger of a programmable CBDC is that it takes away freedom from citizens and hands control over to the State. Not only can they control how, when, where you spend they can also cancel your account and then you are snookered if cash is no longer available.

Jeremy Light
Jeremy Light - pingNpay - London 27 September, 2023, 19:01Be the first to give this comment the thumbs up 0 likes

It would be logical for Carstens to make this call if the BIS were promoting wholesale CBDC - after all, their focus is the settlement of interbank liquidity flows which could benefit signfiicantly from wholesale CBDCs used programmatically to optimise liquidity and minimise settlement risks across borders.
However, he is arguing for retail CBDCs, which the BIS seems to be trying to coordinate and progress in central bank inititiatives around the world. The BIS and central banks have next to zero experience of retail beyond issuing notes and coins (distributed by commercial banks) and it shows.

To state 'The public rightly demands forms of money that meet their needs and expectations.' is sophistry as there is no compelling evidence of public demand anywhere for CBDCs - take up of retail CBDCs launched so far such as in Nigeria or the Bahamas has been lack lustre and there is considerable public opposition to them in countries such as the UK and USA.

It will be interesting to see how CBDCs develop, but with retail CBDCs driven by little more than international group-think my bet is it will be wholesale CBDCs driven by market demand that will succeed.