BIS general manager Agustin Carstens has called on countries to modernise their existing legal frameworks in a way that ensures legitimacy, privacy, integrity and choice for central bank digital currencies.
According to an IMF 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.
"This needs to be rectified," says Carstens. "The public rightly demands forms of money that meet their needs and expectations. Central banks have a mandate to meet those demands and have made significant investments to address the technical and operational requirements for CBDCs. It is simply unacceptable that unclear or outdated legal frameworks could hinder their deployment. The work to address these issues needs to begin in earnest. And it needs to proceed at pace."
Carstens acknowledges that different countries have different legal frameworks, culture and traditions and will likely approach the problem in diverse ways.
Nonetheless, international coordination and cooperation is critical, he says: "It would be unfortunate if we ended up with a fragmented system and legal framework in which different digital currencies don't interoperate."