IMF study finds only 40 central banks can issue CBDC legally. On Thursday, the IMF published a blog post on their exploration on whether or not digital money is legally real money.
Catalina Margulis, a consulting counsel in the IMF Legal Department’s Financial and Fiscal Law unit, and Arthur Rossi, a research officer in the same unit found that “close to 80 percent of the world’s central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework is not clear.”
They added “To help countries make this assessment, we reviewed the central bank laws of 174 IMF members … and found out that only about 40 are legally allowed to issue digital currencies.”
The IMF researchers noted that “To legally qualify as currency, a means of payment must be considered as such by the country’s laws and be denominated in its official monetary unit. A currency typically enjoys legal tender status, meaning debtors can pay their obligations by transferring it to creditors.”
“Therefore, legal tender status is usually only given to means of payment that can be easily received and used by the majority of the population. That is why banknotes and coins are the most common form of currency.” they shared.
The authors noted that to “use digital currencies, digital infrastructure — laptops, smartphones, connectivity — must first be in place.” However, they pointed out that “governments cannot impose on their citizens to have it, so granting legal tender status to a central bank digital instrument might be challenging.”
The researchers also mentioned legal concerns raised by the creation of central bank digital currencies (CBDCs). Among the areas of concern are “tax, property, contracts, and insolvency laws; payments systems; privacy and data protection; most fundamentally, preventing money laundering and terrorism financing,” the IMF researchers described.