Legal Aspects of CBDCs: Central Bank and Monetary Law Considerations

IMF Working Paper: WP/20/254

Authors: Wouter Bossu, Masaru Itatani, Catalina Margulis, Arthur Rossi, Hans Weeink, Akihiro Yoshinaga.

Introduction

This paper opens asking three questions from a legal perspective,

• Do central banks (CBs) have the authority to issue digital currency?

• Can Central Bank Digital Currencies (CBDCs) be real ‘currency’?

• Should digital currency be legal tender?

Definition of CBDCs

The Committee on Payments and Market Infrastructures (CPMI) define a CBDC as being a new form of CB money which is a CB liability, denominated in an existing unit of account and used as a medium of exchange and a store of value. The International Monetary Fund (IMF) use a slightly different definition, describing it as ‘a new form of money, issued digitally by the CB and intended to serve as legal tender.’ The difference between private and CB money is that CB money is a liability on a CB. Liabilities on CB’s are regulated by CB laws.