According to Agustín Carstens, the head of the Bank for International Settlements, the private sector will be crucial in bringing central bank digital currencies (CBDC) to market. CBDCs are essential for developing financial institutions.
“Whether in wholesale form – as a type of digital central bank reserve – or retail form – as a digital banknote – it is increasingly clear, at least to me, that these new forms of money will sit at the core of the future financial system,” Carstens said in a speech at a conference on CBDCs in Basel, Switzerland on Wednesday.
Global central banks are investigating the possibility of releasing digital renditions of their national currencies, as advised by the organization.However, Carstens claims that compared to the private sector, monetary authorities will have a very small part to play in the issuing of CBDCs.
“Most customer-facing services will remain in the private sector’s remit,” Carstens said. “Cyber resilience among these institutions will also be crucial to maintaining trust in the system as a whole … And this activity does not need to be done by individual organizations in isolation – we can share knowledge. In fact, collaboration between the private and public sectors is key to manage existing and emerging cyber threats,” he said.
Carstens said that running CBDC systems presents security issues, but that in order to succeed, “it will be crucial not to ignore other design objectives,” including preserving a suitable degree of anonymity, particularly in retail CBDCs.
“Central banks know that they have a responsibility not only to keep pace with the digital age, but to lead innovation to ensure that it serves the public good,” Carstens said.
Recently, he made a demand on nations to enact the necessary laws to enable the issuing of CBDCs.