BASEL, Switzerland—Legal frameworks ensuring user privacy and the freedom to choose between central bank digital currencies (CBDCs) and other forms of money will be key in driving CBDC adoption, according to a new report.
“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,” Bank of International Settlements General Manager Agustín Carstens said in recent remarks, Cointelegraph reported.
Carstens added that different countries’ laws specify what types of money their central bank can issue, which typically includes physical cash, as well as credit balances on current and reserve accounts, according to the report.
“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 said, Cointelegraph reported.
93% of Banks Involved
“Carstens also referred to a BIS study that indicates 93% of the world’s central banks are engaged in developing CBDCs at various stages,” the report added. “Considering that most of these institutions are actively looking to meet public demand for digital forms of fiat, the BIS chief said outdated or unclear legal frameworks hindering their deployment were unacceptable.”
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