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The Bank for International Settlements (BIS) has issued a warning about the legal uncertainties surrounding central bank digital currencies (CBDCs), emphasizing the need for a swift resolution.
Agustin Carstens, General Manager of BIS, expressed concern over the lack of legal powers to issue CBDCs in most countries. While nations have established laws governing banknotes, coins, and credit balances, a 2020 IMF paper revealed that nearly 80% of central banks either lack the authority to issue digital currencies under their existing legal frameworks or operate in a legal gray area.
Carstens stressed the urgency of addressing this issue, stating, “This needs to be rectified, as the public rightly demands forms of money that meet their needs and expectations.”
The BIS’s warning comes as central banks worldwide accelerate their efforts to develop CBDCs in response to the evolving landscape of cryptocurrencies. Currently, 11 countries have already launched their own CBDCs, with the European Central Bank expected to receive approval to begin work on a digital euro in the coming month.
Carstens, overseeing much of the global CBDC test work, pointed out that central banks have both a mandate to meet the public’s demands and have made significant investments in CBDC development. He called it “simply unacceptable” for unclear or outdated legal frameworks to hinder the deployment of CBDCs.
He urged prompt action to address these legal issues and emphasized the need for a swift resolution process.
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