Bank of Japan (BoJ) reported on legal issues around CBDC issuance
It seems that Facebook has launched a digital currency release movement around the world. From Central Bank Digital Currencies (CBDC) of China to USD Digital Currency (USDD) of Global Currency Organization. However, where will these digital currencies be applied? Follow AZCoin News to discover research reports from the Legal Issues Study Group on CBDC of Bank of Japan (BoJ)!
BoJ described the Account-type CBDC is similar to the deposits that individuals and firms have in private banks. And, the Token-type CBDC is more like a digital form of banknote. From a legal perspective, accounts have extensive existing legislation. Furthermore, there are options on how both of the currency-types might be issued.
However, the main limitation for the central bank is the Bank of Japan Act. Bank of Japan restriction act on banknotes. Therefore, to issue CBDC, they need to amend the Act. Also, Anti-money laundering (AML) and counter-terrorism vetting procedures would be required. If all goes well, the Bank of Japan may directly distribute the CBDC if personal information accumulated by the central bank will be protected under the Personal Information Protection Act. Besides, they can be distributed through intermediaries such as banks or payment companies.
However, there are still cases that have not been strictly addressed. For example, what if a legal seizure of money is required? Or what if the digital data is duplicated or disappears? In the latter case, the account type of CBDC is covered by existing legislation. In the case of a token-based CBDC, while theoretically, one could seize the data, that’s not something fully considered to date.
On the other hand, many other central banks are raising legal topics related to CBDC. Meanwhile, the Bank of Japan released a document exploring the practical aspects of retail CBDC’s earlier this year.
Since 2016, the European Central Bank and the Bank of Japan have been collaborating on exploring applications of Blockchain technology. At the same time, the Project Stella initiative has had three phases so far. These include DLT for liquidity savings, DLT for Delivery v Payment (or instant settlement of securities transactions), and DLT for cross border payments.
They cover DLT for saving liquidity, DLT for Delivery and Payment (or instant payment of securities transactions), and, most recently, DLT for cross-border payments.
Up to now, at least 70% of the central banks are seeking to research and issue CBDC to some extent.
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