Speaking at a conference in Switzerland this week, General Manager of the Bank for International Settlements (BIS) Agustín Carstens pressed for urgent legal reforms to pave the way for mainstream central bank digital currency (CBDC) deployment.
Despite major strides in CBDC development by monetary authorities in recent years, Carstens cautioned that ambiguous or outdated legal parameters in many countries remain a critical roadblock.
“It is simply unacceptable that unclear or outdated legal frameworks could hinder [CBDC] deployment,” he said. “The work to address these issues needs to begin in earnest. And it needs to proceed at pace.”
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Carsten’s referenced IMF study for his CBDC reforms
Underscoring this urgency, the BIS GM referenced an IMF study indicating nearly 80% of central banks lack the legal authority to issue a CBDC or have uncertain legal standing to do so. This demonstrates a growing mismatch where legal frameworks significantly trail technical digital currency advancements.
To legitimize CBDCs as sanctioned money, Carstens emphasized they must be firmly rooted in the central bank’s lawful monetary issuance powers. Additionally, he argued that clear legal foundations are essential to underpin public trust, noting money’s function as a social construct.
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With cash usage declining and users demanding programmable, digital money, Carstens said today’s legal systems require a revamp. He stressed that central banks cannot realize the needed monetary innovations on their own.