Home
News
- 1 BIS Chief, Agustin Carstens said that it is unacceptable that an unclear legal framework could hamper the CBDC formation.
- 2 He also added that it is unfortunate if we end up with a fragmented system.
On Wednesday BIS Chief in a Speech in Switzerland praised the benefits of CBDC. He said that it has numerous benefits for the global economy. He also requested the World leaders to amend their laws to facilitate them.
He also enumerated that people want their money to be digital and programmable. They wanted to transfer it across the borders quickly and easily which includes safety as a priority.
BIS Chief Has a View that CBDC Will Reduce the Risk
The private market cryptocurrencies feature both digital and programmability but the BIS Chief said that such currencies can be money without the backing and protection from the Central Bank.
He has a view that stablecoins also fail to meet the bill since their stability is not guaranteed. Circle’s USDC has lost its peg to the dollar. Terra’s SUT stablecoin also collapsed last year. This all shows that these coins are not stable.
Meanwhile, Agustin asserted that CBDC has huge prospects in the area of automation and risk reduction. The retail CBDCs could strengthen financial inclusion and make cross-border payments faster and cheaper.
In 2021, a survey from the International Monetary Fund (IMF) revealed that nearly 80% of central banks are either legally prohibited from issuing the CBDC or are ruled by unclear laws on this matter. Regarding this, the BIS Chief added that these issues need to be solved and need to proceed at pace.
Another survey conducted by CPMI last year revealed that 93% of the Central Bank is already working on CBDC in some manner. Half of them are working on pilots or are involved with strong experiments.
Agustin clarified that it is ultimately up to each jurisdiction to decide whether CBDC issuance is appropriate or not. The Democrats are more open-minded regarding CBDC functioning.
On the other hand, the Republicans want to ban the idea completely. They consider the CBDC as the state surveillance tool that will be used to keep track of the records. The records include the transfer payments and purchases made by citizens on an everyday basis.
The BIS Chief also added in his speech that the legal framework of CBC must focus on privacy as the basic element. This issue needs to be guarded and privacy should be maintained at any cost. The cracked system and legal framework in which different cryptocurrencies do not interchange will be unfortunate. This should be improved.
Mr. Pratik chadhokar is an Indian Forex, Cryptocurrencies and Financial Market Advisor and analyst with a background in IT and Financial market Strategist. He specialises in market strategies and technical analysis and has spent over a year as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the Financial markets.
