CBDCs ‘Central’ to Innovating Financial Systems
Central bank digital currencies (CBDC) are crucial for innovating financial systems, with the private sector playing a significant role in bringing them to market.
Agustín Carstens, head of the Bank for International Settlements, highlighted the importance of these new forms of money in the future financial system.
Central banks worldwide are exploring issuing digital versions of sovereign currencies, but monetary authorities will have a limited role in issuance compared to the private sector.
Most customer-facing services will remain in the private sector’s remit, and collaboration between private and public sectors is key to managing existing and emerging cyber threats.
While security challenges in operating CBDC systems will be addressed, maintaining an appropriate level of privacy, especially in retail CBDCs, is also crucial.
Central banks have a responsibility to keep pace with the digital age and lead innovation to ensure it serves the public good.
Carstens recently called on countries to establish relevant legislation to support CBDC issuance.
(With inputs from Shikha Singh)
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