BIS general manager Agustín Carstens believes legal frameworks that protect CBDC user privacy and maintain monetary freedom of choice will be crucial in driving adoption.
Legal frameworks that ensure that user privacy and the freedom to choose between central bank digital currencies and other forms of money will be key in driving CDBC adoption, according to the head of the Bank of International Settlements.
“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.” “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.”
Criticisms aimed at the potential misuse of CBDCs in regard to social credit scores or standings by their issuers were also addressed. According to Carstens, a CBDC needs to function with a framework of defined rights and obligations.The BIS general manager says that three core elements are imperative. This includes preserving the privacy of CBDC users and their data, the integrity of the financial system as well as the right of people to choose between a CBDC and other forms of money.
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