Central banks have a responsibility not only to keep pace with the digital age but to lead innovation, Agustín Carstens, General Manager of the Bank for International Settlements (BIS), believes.
In his opening remarks at the conference in Basel on Nov. 8, Carstens called the central bank digital currencies (CBDCs) the “central element” of this leadership and elaborated on the potential threats and challenges in implementing them.
One particular challenge is the variety of technological infrastructures different countries intend to develop for their CBDC projects. Carstens also mentioned cyber risks and new possibilities for “criminal activities by unscrupulous actors.”
Speaking of the priorities in adapting the CBDCs to potential threats, the official named the flexibility of its design as the number one issue; however, making a reservation about privacy problems:
“Maintaining an appropriate level of privacy, for example, will be crucial to ensuring public acceptance of retail CBDCs.”
Carstens pledged the BIS’ support for the central banks in their efforts to go digital. This support comes in particular from the BIS Innovation Hub and Cyber Resilience Coordination Centre.
The former has been active lately, participating in numerous digital economy projects. It is helping the Swiss National Bank to develop a wholesale CBDC, building the joint platform with the central monetary authorities of China, Hong Kong, Thailand and the United Arab Emirates, developing a proof-of-concept (PoC) for a transactions tracker with the European Central Bank, and that is far from the complete list of the BIS activities.