BIS general manager Agustín Carstens asks central banks to lead CBDC innovation

General manager of the Bank for International Settlements (BIS), Agustín Carstens. Photo: Photo by ALFREDO ESTRELLA / AFP

In his opening remarks at a conference in Basel, Switzerland, on November 8, the general manager of the Bank for International Settlements (BIS), Agustín Carstens, urged central banks to take the lead in innovating the central bank digital currencies (CBDCs).

The conference was organised by the BIS Innovation Hub and BIS Cyber Resilience Coordination Centre (CRCC) under the theme “Securing the future monetary system: Cybersecurity for central bank digital currencies”.

Carstens highlighted that the financial system is on the cusp of significant change and that the Central banks have the responsibility for leading innovation and ensuring public welfare. He also commented on how the CBDCs are central to the central banks’ efforts to keep pace with the digital age. 

Carstens said, “Whether in wholesale form – as a type of digital central bank reserve – or retail form – as a digital banknote – it is increasingly clear, at least to me, that these new forms of money will sit at the core of the future financial system.”

He also noted that for CBDCs to become the future of the financial system, they must meet several requirements, such as a versatile and user-friendly technical design, a robust legal framework, and rigorous security measures.

He said, “Security is an important consideration for central bank money today. After all, the public’s confidence in central bank money underpins trust in the broader financial system.”

In addition, Carstens stated that other design goals should not be disregarded while aiming to make CBDCs safe. For instance, maintaining a level of privacy will be crucial in ensuring the public’s acceptance of retail CBDCs.

Carstens vowed to support the central banks in their efforts to innovate CBDCs. He said, “The BIS stands ready to help the central bank in their efforts. The BIS Innovation Hub and Cyber Resilience Coordination Centre are leading our efforts in this regard.”

Launched in 2019, the BIS innovation hub is a research centre focused on exploring the potential of new technologies for the financial system. In an ongoing project named ‘Project Tourbillon’, the BIS innovation hub’s Swiss centre is exploring how to improve cyber resiliency, scalability and privacy in a prototype Central Bank Digital Currency (CBDC).

Meanwhile, the BIS Cyber Resilience Coordination Centre is responsible for knowledge-sharing, collaboration and operational readiness across central banks, including deploying its Cyber Resilience Assessments Tool and regional cyber range exercises.

Now that BIS has extended its support, it is up to the central banks to lead innovation to keep up with the digital age.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash