BIS Wants Countries To Set Up Legal Frameworks
The Bank for International Settlements (BIS) has called for countries to establish legal frameworks that facilitate the use of central bank digital currencies, citing potential obstacles from outdated legal systems across different jurisdictions.
BIS General Manager Agustín Carstens warned that outdated legal frameworks in various jurisdictions could hinder the development of Central Bank Digital Currency (CBDCs) in Switzerland. He noted that central banks cannot achieve this alone. A 2021 IMF paper found that 80% of central banks cannot issue a digital currency due to current laws or unclear legal frameworks. A BIS survey revealed 93% of central banks actively participate in CBDC development, suggesting jurisdictional legal frameworks are not keeping pace.
Carstens emphasized the importance of a legal framework that balances user protection and financial system integrity. He emphasized the need for oversight for suspicious transactions and the need for a choice between cash and commercial bank money. A retail CBDC could be available alongside cash, as part of a menu of options that includes both cash and commercial bank money. This would ensure a seamless and transparent financial system for users.
(With inputs from Shikha Singh)
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