As AZCoin News reported, Bank of Japan (BoJ) has released a summary of the Legal Issues Study Group on the CBDC report. The part of the report was released in September 2019.
In the report, discussions were made based on the assumption of four types of CBDC, categorized into account type and token type, direct type, and indirect type.
First of all, what is the difference between account type and token type? This type of account extends the Bank’s role to individuals and private companies. On the other hand, the token type is arguably the digital solution for the fiat we use in everyday life.
Source: Bank of Japan (BoJ)
The difference between the direct and indirect types is that central banks will issue CBDC directly or via commercial banks. If the central bank issues the card directly, it can be assumed that the business of the central bank will increase significantly.
Legal issues revolve around CBDC
The question at this point is whether or not the CBDC can be enacted following the current Bank Law of Japan. Also, another problem is whether CBDC transactions are restricted.
Source: Bank of Japan (BoJ)
Assume that the central bank will select financial institutions as intermediaries and manage the scope of distribution and use. However, we still have concerns that the central bank will focus its power by managing CBDC to the end. And now, the CBDC is no different than the note we are using.
Also, other issues, such as how to prevent money laundering and counterterrorism, should be addressed. There are concerns that the CBDC will be copied in large quantities in a short time.
Is there a need for legal edits?
Based on the above discussions, the Bank Of Japan (BoJ) has proposed a series of laws related to CBDC. Therefore, they need to enact new laws.
China and other countries are actively promoting central bank digital currency issuance. The People’s Bank of China has expressed a view that it has no intention of controlling personal information when it issues CBDC. However, remember what the Chinese government did in the Internet field.
In any case, when the CBDC is issued, it will surely have a significant impact on the current financial system, and more active discussions, including the legal aspects, will be required.
What is CBDC
Central Bank Digital Currency (CBDC) is the digital form of a fiat currency of a nation or territory and is issued and regulated by the competent monetary authority of that country. Theoretically, CBDC creates a new digital mechanism to solve the problem of real-time transferring of money between two parties, thus helping international transactions to happen easily without intermediate steps like in traditional bank transactions.
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