Central Banks Urged to Lead Innovation in the Digital Age
The General Manager of the Bank for International Settlements (BIS), Agustín Carstens, believes that central banks have a responsibility to not only keep up with the digital age but to also take the lead in innovation. He emphasized this point during his remarks at a conference in Basel on Nov. 8, highlighting central bank digital currencies (CBDCs) as a crucial element of this leadership and discussing the potential threats and challenges associated with their implementation.
One of the main challenges mentioned is the different technological infrastructures that various countries plan to develop for their CBDC projects. Carstens also raised concerns about cyber risks and the potential for criminal activities by unscrupulous actors.
Flexibility and Privacy Key Priorities for CBDCs
Carstens stressed the importance of flexibility in designing CBDCs to address potential threats, while also acknowledging the critical need to maintain an appropriate level of privacy to ensure public acceptance of retail CBDCs. He pledged BIS support for central banks in their digital efforts through initiatives like the BIS Innovation Hub and Cyber Resilience Coordination Centre.
The BIS Innovation Hub has been actively involved in various digital economy projects, including collaborating with central monetary authorities on developing wholesale CBDCs, creating joint platforms, and working on proof-of-concept transactions trackers with entities like the European Central Bank.
Hot Take: Central Banks at the Forefront of Digital Innovation
Agustín Carstens’ call for central banks to lead innovation in the digital age reflects a growing recognition of the importance of CBDCs and their potential impact on global financial systems. The emphasis on flexibility and privacy highlights key considerations for successful CBDC implementation, while BIS support signals a commitment to assisting central banks in navigating these challenges.
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