Seoul, South Korea - The chief of the Bank for International Settlements (BIS), Agustin Carstens, emphasized the importance of addressing governance and legal ambiguities in the development of central bank digital currencies (CBDCs). Speaking at a forum hosted by the Bank of Korea (BOK) on Thursday, Carstens highlighted that these challenges need to be resolved alongside advances in technical infrastructure.
According to Yonhap News Agency, Carstens noted that several countries, including South Korea, are actively exploring CBDC pilot programs. These initiatives aim to adapt to the evolving financial system and the emerging digital currency market. However, he pointed out that legal frameworks in many countries are either unclear or do not currently permit the issuance of CBDCs, necessitating legal adjustments for the successful implementation of these projects.
Carstens also addressed the governance aspects of integrating money and non-money claims onto a unified programmable platform. He stressed the importance of different assets residing on the same ledger to facilitate contracts capable of executing complex transactions.
In October, the Bank of Korea, in collaboration with financial regulators, announced plans to conduct a joint test on the feasibility of CBDC in financial transactions. Since August 2021, the BOK has been running a mock test of a CBDC for inter-financial institution transactions.
The feasibility test, a collaborative effort between the BOK, the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS), will expand to include transfers and settlements among financial institutions using a token. This token is distinguished from a virtual coin and is expected to be fully tested by the end of the next year.
Carstens concluded by emphasizing the importance of a cooperative approach involving multiple regulatory bodies and government agencies to realize the vision of a unified ledger system.