Legal troubles may delay CBDCs
As the law will determine what type of central bank digital currency (CBDC) can be issued in each jurisdiction, getting the legal model right is a crucial step in introducing one. The current statutory language seems to provide the ECB with enough room to offer a digital euro directly to the public through digital accounts if it so chooses. However, for example, the US and Brazilian central banks are authorised to establish relations only with a limited set of institutions, notably banks, not with people or corporations. Without a change to these rules, digital dollars and digital reais would have to be distributed to the public through intermediaries, just like cash is made available today through banks. For all central banks considering issuing a CBDC, the time to tackle the legal troubles and seek legislative reform is now, because reaching a political consensus on this model may take time, since CBDCs raise many contentious issues, from changing the business of banking to creating new privacy risks.
