Central banks have a responsibility to stay ahead of the curve and spearhead innovation in the digital age, according to Agustín Carstens, General Manager of the Bank for International Settlements (BIS).
Speaking at a conference in Basel, Switzerland, on November 8, Carstens identified central bank digital currencies (CBDCs) as the “crux” of this leadership role, highlighting the potential risks and challenges associated with their implementation.
One significant challenge is the diversity of technological infrastructures that different countries plan to employ for their CBDC projects. Carstens also raised concerns about cybersecurity threats and the emergence of new avenues for “criminal activities by unscrupulous actors.”
Addressing the priorities in adapting CBDCs to potential threats, the official emphasized the importance of flexible design as the top priority, but also acknowledged privacy concerns:
“Maintaining an appropriate level of privacy, for instance, will be essential to ensuring public acceptance of retail CBDCs.”
Carstens reaffirmed BIS’s commitment to supporting central banks in their digital transformation endeavors. This support primarily stems from the BIS Innovation Hub and Cyber Resilience Coordination Centre.
The Innovation Hub has been particularly active, engaging in numerous digital currency initiatives. It is assisting the Swiss National Bank in developing a wholesale CBDC, collaborating with the central monetary authorities of China, Hong Kong, Thailand, and the United Arab Emirates to build a joint platform, and working with the European Central Bank to create a proof-of-concept for a transactions tracker, among other projects.
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