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Private Law Aspects of Token-Based Central Bank Digital Currencies (IMF Fintech)

Research paperIMF FintechMarch 202552 pages78 min readOriginal source
Key number
86
Surveyed central banks in BIS study p.6
Key number
3
Central banks that issued CBDCs p.6

Summary

  • As of late 2023, 94 percent of 86 surveyed central banks were actively exploring CBDCs, moving from research to experiments.p.6
  • Only 3 central banks (The Bahamas, Nigeria, and Jamaica) had officially issued CBDCs as of late 2023.p.6
  • Token-based CBDC is legally defined as a central bank liability where a monetary claim is incorporated into a digital token without a current-account relationship.p.6
  • Account-based CBDC operates on existing current-account legal mechanisms, whereas token-based CBDC creates unprecedented legal questions around digital incorporation.p.11
  • Under Liechtenstein's 2019 Act on Tokens, holders of private keys are granted ownership attributes over token assets.p.17
  • Offline transactions present distinct challenges for perfecting title transfers when tokens move between user devices without immediate central ledger confirmation.p.23
  • Depositing token-based CBDC with a commercial bank converts the holder's central bank claim into a commercial bank claim, expanding the bank's balance sheet.p.31

Key insights

  1. Token-based CBDC incorporates a direct monetary claim on the issuing central bank into a digital token.p.6
  2. Account-based CBDC relies on established current-account legal frameworks and does not introduce novel private law issues.p.11
  3. Classifying token-based CBDC as a hybrid asset, a sui generis property form, or a pure intangible determines how ownership title is transferred and evidenced.p.16
  4. Legally linking private key control or wallet balances to ownership is essential to establish valid title transfers.p.18
  5. Disapplying the Nemo Dat rule to token-based CBDC protects good faith acquirers and facilitates digital currency circulation.p.23
  6. Settlement finality statutes built for interbank payment systems do not automatically apply to retail token-based CBDC payments.p.22
  7. Safekeeping arrangements must ensure that client CBDCs in omnibus accounts remain segregated from an intermediary's estate during insolvency.p.35
  8. Traditional lex rei sitae conflict-of-law rules require legislative updates to specify the legal situs of tokens on distributed ledgers.p.38

Topics and entities

GlobalBankingPaymentsRegulationBank for International SettlementsBank of JamaicaCentral Bank of NigeriaCentral Bank of The BahamasUNIDROIT

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