The central banker for central banks wants govts to change their laws to give central banks legitimacy, authority & control over CBDCs: perspective
Bank for International Settlements general manager Agustin Carstens says, “People want their money to be digital and programmable,” during a speech on Central Bank Digital Currency (CBDC) legal challenges.
Speaking at the Bank for International Settlements (BIS) Innovation Hub-Financial Stability Institute conference on legal aspects of CBDCs in Basel, Switzerland on September 27, Carstens lamented the fact that “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.”
Despite the legal challenges, the BIS chief said that people want to have a programmable CBDC, stating:
Carstens’ argument is predicated on his belief that “the current monetary system […] needs to evolve” because that’s what people want and that “advances in digital services are highlighting shortcomings in existing systems, while raising expectations about what money should do.”
However, Nigeria’s eNaira is one example of a CBDC experiment that directly contradicts Carstens’ statements.
Writing for the Mises Institute last month, Polish journalist Jan M. Fijor reported that 99.5 percent of Nigerians voted against the eNaira last October, but that the government pushed forward with it anyway while decreasing the availability of physical cash.
Even the International Monetary Fund (IMF) acknowledges that Nigeria’s CBDC adoption has been a disappointment.
According to the IMF report, “Nigeria’s eNaira, One Year After,” published in May 2023, “The public adoption of the eNaira thus far has been disappointingly low,” and that “despite the laudable undisrupted operation for the first full year, the CBDC project has not yet moved beyond the initial wave of limited adoption.”
What’s the IMF’s solution?
So, while Carstens at the BIS says that people are demanding a programmable CBDC, he completely ignores the situation in Nigeria, but that’s just one example.
He also ignores the concerns of citizens all over the globe that governments and corporations could be able to program CBDCs to restrict less desirable purchases, such as meat, ammunition, or gasoline, with the potential for even more serious abuses of power.
On the legal front, the BIS GM said that “Legal frameworks must also advance if we want CBDC to deliver on its potential” while acknowledging that “CBDCs raise new questions and will involve new use cases,” so “the legal framework must keep up.”
According to Carstens, “The legal framework is a key underpinning for the legitimacy of money, and the trust that people place in money. Without the law, money cannot function […] 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.”
Ultimately, the central banker for central banks wants governments all over the world to change their laws to give central banks the legitimacy, authority, and total control over issuing programmable CBDCs.
Image: Agustin Carstens, BIS YouTube