Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations

Author: Bossu Wouter

Volume/Issue: Volume 2020 Issue 254

Publication date: November 2020

ISBN: 9781513561622

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Topics covered in this book

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Banks and Banking , Finance , Money and Monetary Policy , Public Finance , Central Bank Digital Currency , CBDC , Blockchain , Cryptocurrency , Crypto assets , WP , central bank law , monetary unit , book money , digital currency , law reform , token-based CBDC , Central Bank digital currencies , Currencies , Central bank legislation , Legal support in revenue administration , Payment systems

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Summary

This paper analyzes the legal foundations of central bank digital currency (CBDC) under central bank and monetary law. Absent strong legal foundations, the issuance of CBDC poses legal, financial and reputational risks for central banks. While the appropriate design of the legal framework will up to a degree depend on the design features of the CBDC, some general conclusions can be made. First, most central bank laws do not currently authorize the issuance of CBDC to the general public. Second, from a monetary law perspective, it is not evident that “currency” status can be attributed to CBDC. While the central bank law issue can be solved through rather straithforward law reform, the monetary law issue poses fundmental legal policy challenges.