Agustín Carstens, the head of the Bank for International Settlements (BIS), discusses the potential of central bank digital currencies (CBDCs) and the need for robust security in a world where cryptocurrencies expose weaknesses in financial systems.
In a recent speech in Basel, Switzerland, BIS Chief Agustín Carstens emphasized the pivotal role that central bank digital currencies (CBDCs) are set to play in the future financial landscape. He believes CBDCs will bring innovation and meet public expectations while acknowledging the security challenges they face. Carstens stressed that CBDCs, whether for wholesale or retail use, must prioritize security and public trust. He highlighted the importance of flexibility in their design to adapt to emerging threats like quantum computing.
Carstens also emphasized the need to balance security with privacy, stating that maintaining an appropriate level of privacy is crucial for retail CBDCs’ public acceptance. The BIS Innovation Hub is actively working on integrating quantum-resistant cryptography and ensuring offline resilience in CBDC systems.
While touting the potential of CBDCs, Carstens also pointed out the vulnerabilities in poorly designed and supervised financial systems that cryptocurrencies have exposed. He sees CBDCs as a way to address these issues and lead digital innovation for the public good, despite formidable security challenges.