Agustin Carstens, general manager of the Bank for International Settlements (BIS), appears to have changed his negative stance on central bank digital currencies (CBDCs) and now says such currencies may open up new possibilities.
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Published on December 5, entitled "The Future of Money and Payment Systems: The Role of Central Banks? In his speech, Carstens studied the central bank's attitudes to emerging technologies to build a more efficient and inclusive financial system.
Wholesale and retail CBDC
Carstens said that the introduction of retail CBDC (available to the public, including businesses and consumers) can also bring significant changes to finance by opening up new possibilities, such as the availability of payment 24/7, to varying degrees Anonymous letters, point-to-point transfers.
He went on to point out that wholesale CBDCs (where the network participants are financial institutions) can be compatible with central bank clearing liquidity regulations. Carstens said wholesale CBDCs will not cause difficult financial footprint issues, as they will be limited to institutions that already use central bank deposits.
Unlike wholesale CBDCs, Carstens outlined that the retail version raises a number of issues, such as appointing entities responsible for enforcing know your customers (KYC) and anti-money laundering regulations.
The negative impact of CBDC on the financial system
Back in late March, Carstens was not so optimistic about the CBDC and advised against issuing such currencies. Carstens then argued that the CBDC could facilitate bank operations and enable people to transfer their funds from commercial banks to central bank accounts faster, thereby disrupting the stability of the system.
At the time, he also pointed out that the central bank's implementation of monetary policy and the stability of traditional markets will have huge operational consequences. "The central bank will not step on the innovative brakes," Carstens said. "But they should not speed up regardless of all traffic conditions."
At the same time, many countries, including China, France and Ghana, are exploring the development of digital national currencies.