Bank Of International Settlements’ GM Calls For Legal CBDC Framework

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Bank Of International Settlements GM Calls
  • Bank of International Settlements’ general manager Agustin Carsten has called for CBDC legal structure across countries.
  • In a recent speech published on the bank’s website, Carsten discussed the benefits of CBDC.
  • According to BIS’ 2022 survey, 93% of central banks were actively involved in various CBDC initiatives.

Earlier today, Agustin Carstens, the general manager of the Bank for International Settlements (BIS) stated that all nations should establish legal facilities that facilitate the implementation of central bank digital currencies (CBDCs). According to a speech published on the official BIS website, Carstens had quoted:

“Wholesale CBDCs have vast potential in the areas of automation and risk mitigation. They could in effect make central bank money programmable, for example by providing that settlement will occur if and only if certain conditions are met.”

In the speech, Carstens emphasized the significance of CBDCs, citing that wholesale CBDCs would also enable the advancement of more intricate retail financial products, such as tokenized deposits. Moreover, CBDCs resemble the contemporary two-tier banking system, in which central banks establish the fundamental foundation, and private entities offer customer-oriented services.

While referring to BIS’ recent Annual Economic Report, Carstens highlighted that the concept of a “unified ledger,” would aid in the seamless integration of the different strata within the digital monetary system. Over time, it might even expand to permit concurrent and immediate settlement in central bank currency for various asset categories.

According to a 2020 report from the International Monetary Fund, approximately 80% of central banks either lack the legal authorization to issue a CBDC based on current legislation or operate within legal frameworks that lack clarity on this issue. During a conference in Switzerland, Carstens said that this issue needs to be urgently corrected, noting that, “The public rightly demands forms of money that meet their needs and expectations.”

In a video from 2020, Carstens discussed that a key difference between cash and CBDC is that the central bank will have complete control over the rules and regulations that dictate its use. Additionally, the central bank will also possess the technology to enforce these rules and regulations. In 2022, BIS conducted a survey across 86 central banks and found that 93% of central banks were actively involved in various CBDC initiatives.

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