CBDCs Are 'Central' to Innovating Financial Systems, BIS Chief Says

Central banks will have a limited role to play relative to the private sector in CBDC issuance, BIS general manager Agustín Carstens said.

AccessTimeIconNov 8, 2023 at 10:18 a.m. UTC

Central bank digital currencies (CBDC) are key to innovating financial systems, and the private sector will play a major role in getting them to market, said Agustín Carstens, the head of the Bank for International Settlements.

"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.

Under the group's recommendation, central banks around the world are exploring issuing digital versions of sovereign currencies. But monetary authorities will have only a limited role to play in the issuance of CBDCs compared with the private sector, according to Carstens.

"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 pointed to security challenges in operating CBDC systems but said that, in order to succeed, "it will be crucial not to ignore other design objectives," such as maintaining an appropriate level of privacy, especially 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.

He recently called on countries to set up relevant legislation to support CBDC issuance.

Edited by Sheldon Reback.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Sandali Handagama

Sandali Handagama is CoinDesk's deputy managing editor for policy and regulations, EMEA. She does not own any crypto.