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

Author

Listed:
  • Wouter Bossu
  • Mr. Masaru Itatani
  • Arthur D. P. Rossi

Abstract

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.

Suggested Citation

  • Wouter Bossu & Mr. Masaru Itatani & Arthur D. P. Rossi, 2020. "Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations," IMF Working Papers 2020/254, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/254
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    Citations

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    Cited by:

    1. Agur, Itai & Ari, Anil & Dell’Ariccia, Giovanni, 2022. "Designing central bank digital currencies," Journal of Monetary Economics, Elsevier, vol. 125(C), pages 62-79.
    2. Dionysopoulos, Lambis & Marra, Miriam & Urquhart, Andrew, 2024. "Central bank digital currencies: A critical review," International Review of Financial Analysis, Elsevier, vol. 91(C).
    3. Kwami Ahiabenu, 2022. "A Comparative Study of the Design Frameworks of the Ghanaian and Nigerian Central Banks’ Digital Currencies (CBDC)," FinTech, MDPI, vol. 1(3), pages 1-15, August.
    4. Zbigniew Polański & Mikołaj Szadkowski, 2021. "An accounting-based model of seigniorage, and recent monetary developments," Bank i Kredyt, Narodowy Bank Polski, vol. 52(5), pages 391-436.
    5. Panetta, Ida Claudia & Leo, Sabrina & Delle Foglie, Andrea, 2023. "The development of digital payments – Past, present, and future – From the literature," Research in International Business and Finance, Elsevier, vol. 64(C).
    6. Nadia Pocher & Andreas Veneris, 2022. "Central Bank Digital Currencies," Springer Optimization and Its Applications, in: Duc A. Tran & My T. Thai & Bhaskar Krishnamachari (ed.), Handbook on Blockchain, pages 463-501, Springer.
    7. Ozili, Peterson K, 2023. "A Survey of Central Bank Digital Currency Adoption in African countries," MPRA Paper 118794, University Library of Munich, Germany.
    8. Ozili, Peterson K, 2021. "Central bank digital currency can lead to the collapse of cryptocurrency," MPRA Paper 111218, University Library of Munich, Germany.
    9. Kilian Wenker, 2022. "Retail Central Bank Digital Currencies (CBDC), Disintermediation and Financial Privacy: The Case of the Bahamian Sand Dollar," FinTech, MDPI, vol. 1(4), pages 1-17, October.
    10. Jianguo Xu, 2022. "Developments and Implications of Central Bank Digital Currency: The Case of China e‐CNY," Asian Economic Policy Review, Japan Center for Economic Research, vol. 17(2), pages 235-250, July.
    11. Luu, Hiep Ngoc & Nguyen, Canh Phuc & Nasir, Muhammad Ali, 2023. "Implications of central bank digital currency for financial stability: Evidence from the global banking sector," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    12. Marcelo A. T. Aragão, 2021. "A Few Things You Wanted to Know about the Economics of CBDCs, but were Afraid to Model: a survey of what we can learn from who has done," Working Papers Series 554, Central Bank of Brazil, Research Department.
    13. Ozili, Peterson K, 2022. "Central bank digital currency research around the World: a review of literature," MPRA Paper 111389, University Library of Munich, Germany.

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