The BIS report focuses on new banking strategies
The Bank for International Settlements (BIS) has determined how the introduction of Central Bank Digital Currencies (CBCCs) poses new risks.
“As risks change, this is not a one-time action, but should be done repeatedly,” the report said.
Central banks should adjust their approach to accept the risks of CBDC
The latest report suggests that BIS central banks should see CBCCs as more than just an efficient form of digital currency. However, central banks should see it as a fundamental change in the day-to-day execution of transactions.
“Given the major implications of issuing the CBCC, this should not be viewed as a technological project but as a fundamental change in central banking practice.”
However, it emphasizes the importance of applying a comprehensive risk management framework to the CBC model.
“The multifaceted nature of the risks calls for an integrated risk management framework to inform the design of the CBCC model and manage risks throughout their lifecycle.”
In the meantime, the report suggests the need for ongoing monitoring of CBCCs and adjusting plans as needed.
“This requires the development of robust business continuity plans to ensure the reliability and continuity of services based on potential scenarios and risks throughout the entire (digital) currency cycle.
Read More: Digital Rupee (e-Rupee): A Comprehensive Guide to CBCC India
BIC is the main advocate for a unified set of international rules
Meanwhile, this comes after BIS chief Augustine Carstens stressed the need for governments to work together to establish a series of laws for CBCCs.
Furthermore, he emphasized the importance of successful implementation of CBDCs. This explains the need not only for technological advances but also for a sophisticated legal framework.
“Money is a social construct. People trust it today because they know others will trust it tomorrow. The legal framework is a key foundation for the legitimacy of money and people's trust in money. Without law, money does not work.”
Read more: How to open a Bitcoin account in 3 easy steps
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