BIS Urges Countries to Lay Legal Groundwork for CBDCs

The Bank for International Settlements (BIS) has urged governments worldwide to establish a regulatory framework to underpin the deployment of central bank digital currencies (CBDCs). BIS head Agustín Carstens said this at the BISIH-FSI conference, according to The Block.

Carstens warned that outdated legal frameworks in different jurisdictions could hinder the development of the technology.

“Work to resolve these problems must begin in earnest. And it must proceed at a rapid pace,” he emphasised.

According to him, central banks are currently actively studying CBDCs to spur innovation, but cannot achieve the desired transformation on their own.

The BIS chair cited the документ IMF from 2021, according to which almost 80% of all central banks either cannot issue digital currency under existing laws, or have vague legal constraints.

Meanwhile, a BIS survey showed that 93% of central banks are at various stages of CBDC development. Such data indicate that the legal framework is lagging behind the new technologies, Carstens noted.

He also urged countries to craft laws that are as interoperable with other jurisdictions as possible for this new form of money.

“It would be unfortunate if we ended up with a fragmented system and a legal framework in which different digital currencies do not interact with each other,” he added.

In his view, such legislation should strike a balance between user protection and the integrity of the financial system.

Speaking about the shrinking use of cash, the BIS chief noted that cryptocurrencies and stablecoins “fuel demand for change,” but rejected any intrinsic value.

“Even ‘stablecoins’ do not guarantee price stability. They neither meet nor can they meet the standards that the public expects from money,” concluded Agustín Carstens.

As BIS has said, CBDCs are the foundation of future monetary systems. Experts say that other digital assets are a misguided path to tokenisation.

Earlier, IMF experts acknowledged that banning cryptocurrencies is not the best way to mitigate the risks associated with them.