Global Monetary System and CBDCs Must Evolve Amid Demand for Digital Forms of Cash: Banking Titan Agustín Carstens

The head of the Bank for International Settlements (BIS) says the global monetary system is evolving, and work must be done to ensure central banking digital currencies (CBDCs) are ready for mass adoption.

In a recent address, Agustín Carstens emphasizes the crucial role of central banks in establishing a robust legal framework for Central Bank Digital Currencies (CBDCs), prioritizing legitimacy, privacy, integrity, and user choice. While acknowledging the effectiveness of the current monetary system, Carstens underscores the necessity for evolution, citing the declining use of cash and growing demands for innovative forms of money. He asserts that CBDCs can address these evolving needs, stressing the significance of safeguarding user privacy and preferences.

Carstens advocates for international collaboration to create a connected and interoperable digital system, emphasizing the preservation of user privacy, financial system integrity, and the freedom of users to choose between CBDCs and other forms of money. He underscores the importance of avoiding a fragmented legal framework that hinders interoperability between different digital currencies.

As a vocal critic of cryptocurrencies, Carstens dismisses them, including stablecoins, as not meeting the criteria of being considered money. He argues against their role as the next iteration of the financial system due to the absence of centralized banking institution backing. Carstens emphasizes the shortcomings of private cryptocurrencies and stablecoins, stating that they lack the support, regulatory framework, access to central banks, and payment finality that the public expects from a currency. Despite the popularity of stablecoins as speculative investments, Carstens contends that they do not assure a stable value and cannot meet public standards for a reliable form of money.

Sep 28, 2023