Central Bank Digital Currency

The International Monetary Fund (IMF) has released a paper on central bank digital currency (CBDC).

This paper analyzes the legal foundations of #CBDC under central bank and monetary law.

Absent strong legal foundations, the issuance of CBDC poses legal, financial and reputational risks for #centralbanks.

While the appropriate design of the #legal framework will up to a degree depend on the design features of the CBDC, some general conclusions can be made.

Token-based and account-based CBDC are legally very different concepts and forms of money. The former is a new form of money: a central bank liability incorporated in a #digital #token and transferred by transfer of that token. In contrast, account-based CBDC is not a new form of #money, but merely book money expressed in digital form.

First, most #centralbank laws do not currently authorize the issuance of CBDC to the general public.

Second, from a #monetary law perspective, it is not evident that “currency” status can be attributed to #CBDC.

While the central bank law issue can be solved through rather straithforward law reform, the #monetary law issue poses fundamental legal policy challenges.

#IMF #cbdcs #digitalcurrencies #payments #monetarypolicy #digitalassets #innovation