According to Agustin Carstens, the General Manager of the Bank of International Settlements (BIS), outdated legal frameworks are preventing the globe from releasing much-needed Central Bank Digital Currencies (CBDCs). The legal frameworks that ensure user privacy and the right to select between central bank digital currencies (CBDCs) and other kinds of money will be crucial in boosting CBDC adoption.
On September 27th, BIS general manager Agustin Carstens spoke at the BIS Innovation Hub conference in Switzerland, where he emphasized the need of legislative frameworks for the continued growth and development of CBDCs throughout the globe. The banking head lauded the potential boost to the global economy from CBDCs and urged international governments to change their laws to reflect this.
Despite the fact that private market cryptocurrencies (such as Bitcoin) feature both digitality and programmability, the BIS chief stated that such currencies cannot be money without, among other things, the endorsement and protection of the central bank.
Most fundamentally, the legitimacy of a CBDC will be derived from the legal authority of the central bank to issue it. That authority needs to be firmly grounded in the law.
Agustin Carstens, General Manager – the Bank of International Settlements (BIS)
Carstens also cited a BIS study indicating that 93% of the world’s central banks are in various stages of developing CBDCs. In light of the fact that the majority of these institutions are actively seeking to satisfy public demand for digital forms of fiat currency, the BIS director stated that outmoded or ambiguous legal frameworks preventing their deployment are untenable. Also addressed were criticisms regarding the potential misuse of CBDCs for enforcing social credit scores. According to Carstens, a CBDC must operate within a framework of clearly defined rights and responsibilities.
Central banks have a responsibility to meet the public’s demands and drive innovation in money and the financial system more broadly. But they cannot do this alone. They must work closely with other stakeholders, including the private sector.
Agustin Carstens, General Manager – the Bank of International Settlements (BIS)
China is still at the forefront of digital yuan CBDC use and development. New to this version of the pilot e-CNY app is the option for foreign visitors visiting China to load up their virtual wallets with yuan in advance using Visa or Mastercard. The CBDC Anti-Surveillance State Act, which would bar the Federal Reserve from issuing a CBDC, was approved by a vote of the House Financial Services Committee on September 21. The bill’s next stop is Congress, where it will be introduced as legislation to combat “state control over currency.”
