cryptogazette.com
Recent reports indicate that the head of the Bank for International Settlements (BIS) has acknowledged the evolution of the global monetary system and emphasized the need for preparation to ensure widespread adoption of central banking digital currencies (CBDCs).
CBDCs in the news
Agustín Carstens delivered a speech stressing the responsibility of central banks to establish a robust legal framework for CBDCs that prioritizes legitimacy, privacy, integrity, and user choice.
Although the current system of cash and commercial bank money has been effective, Carstens believes it is time for progression.
The use of cash is declining and people are demanding new forms of money that are digital and programmable. Advances in digital services have highlighted shortcomings in existing systems and raised expectations about what money should do. To address these issues, CBDCs are seen as a promising improvement.
However, protecting people’s privacy and preferences is important. It is crucial to preserve the privacy of CBDC users and the integrity of the financial system while allowing users to choose between CBDC and other forms of money. International cooperation is also necessary to ensure that different digital currencies can interoperate.
The BIS Innovation Hub is leading legal projects in this area, and gatherings like this are valuable in informing national and international work. By building a robust legal framework, we can ensure that CBDCs will flourish.
Carstens, a well-known critic of cryptocurrencies, has expressed his opinion that stablecoins and other forms of digital currencies should not be considered as money.
He argues that these types of financial instruments lack the backing of a centralized banking institution, which is essential for any currency to be considered legitimate.
According to Carstens, the private sector has attempted to address the public’s demand for new forms of money by issuing unbacked cryptocurrencies and stablecoins.
While these instruments have gained popularity as speculative investments, they do not possess the essential qualities of money.
They do not offer the backing and protection of a central bank, reliable regulatory framework, access to central bank lending, or guaranteed finality of payments. Even stablecoins cannot guarantee a stable value, and they fail to meet the standards that the public expects of real money.