BIS Chief: CBDC Frameworks Must Protect User Privacy
According to the head of the Bank of International Settlements, legal frameworks safeguarding user privacy and the flexibility to choose between central bank digital currencies (CBDCs) and other forms of money will be critical in encouraging CBDC adoption.
On September 27, BIS general manager Agustn Carstens stated at the BIS Innovation Hub conference in Switzerland that legal frameworks continue to be a crucial issue in the creation and dissemination of CBDCs around the world:
“Most fundamentally, the legitimacy of a CBDC will be derived from the legal authority of the central bank to issue it. That authority needs to be firmly grounded in the law.”
He went on to say that different countries' laws govern what kinds of money their central banks can print, which often includes physical cash as well as credit balances on current and reserve accounts:
“According to an IMF [International Monetary Fund] paper published in 2021, close to 80% of central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is unclear.”
Carstens also cited a BIS research that found 93% of the world's central banks are working on CBDCs in various phases. Because the majority of these institutions are actively seeking to address public demand for digital forms of fiat, the BIS chief stated that outmoded or ambiguous regulatory frameworks impeding their adoption were unacceptable.
The possible misuse of CBDCs for enforcing social credit scores was also criticized. A CBDC, according to Carstens, must operate inside a framework of specified rights and obligations.
According to the BIS general manager, three critical features must be preserved: the privacy of CBDC users and their data, the integrity of the financial system, and people's right to choose between CBDC and other kinds of money.
Sources:
https://decrypt.co/199007/the-law-must-evolve-to-make-cbdcs-possible-says-bis-chief
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