Sunseop Jung, Legal Aspect of CBDC and Financial System - from the Perspective of the Monetary and Central Banking Law, Korean Journal of Banking and Financial Law, Vol. 14(2) (2021), pp.3-66.
<Abstract>
The purpose of this study is to present the basic principles of legal system design based on the analysis of the legal nature of CBDC and its impact on the financial system. Although the legal issues related to CBDC are broad, such as tax law, insolvency law, and private international law, this paper focuses on issues under traditional monetary law and central bank law. In terms of monetary law, it is important to see CBDCs as legal tender. A key issue under the central banking law is whether the central bank has the right to issue CBDCs and the central bank's role in financial market, in particular in payment market. In Korea, the main monetary and central banking act is the Bank of Korea Act. The conclusion of this paper can be summarized into the following three, focusing on the scope of related discussions, intervention in the financial system, and data protection of CBDC holders. Firstly, CBDCs should be analyzed from the viewpoint of the monetary and central banking law, but its specific impact goes beyond the scope of the traditional monetary and central banking law. Therefore, CBDCs, as part of a payment and settlement system, should be designed and operated from the perspective of the entire financial system. Secondly, for the design of the CBDC system, complementarity and minimal intervention were presented as a principle. CBDCs should not be aimed at deterring or crowding out non-cash payment instruments in the private sector or payment operations based on them. As a basic principle, CBDC should at least intervene within the scope to support the functioning of payment system and to promote innovation and competition in the payment field. Thirdly, in particular, when general purpose CBDCs are introduced, the problem of personal data protection is serious. In this regard, the principle of anonymity of cash under the monetary law and the minimum necessary rule under the data protection law must be observed.
<Keywords>
CBDC, legal tender, complementarity and minimal intervention, anonymity of cash, minimum necessary rule
Sunseop Jung, Legal Aspect of CBDC and Financial System - from the Perspective of the Monetary and Central Banking Law, Korean Journal of Banking and Financial Law, Vol. 14(2) (2021), pp.3-66.
<Abstract>
The purpose of this study is to present the basic principles of legal system design based on the analysis of the legal nature of CBDC and its impact on the financial system. Although the legal issues related to CBDC are broad, such as tax law, insolvency law, and private international law, this paper focuses on issues under traditional monetary law and central bank law. In terms of monetary law, it is important to see CBDCs as legal tender. A key issue under the central banking law is whether the central bank has the right to issue CBDCs and the central bank's role in financial market, in particular in payment market. In Korea, the main monetary and central banking act is the Bank of Korea Act. The conclusion of this paper can be summarized into the following three, focusing on the scope of related discussions, intervention in the financial system, and data protection of CBDC holders. Firstly, CBDCs should be analyzed from the viewpoint of the monetary and central banking law, but its specific impact goes beyond the scope of the traditional monetary and central banking law. Therefore, CBDCs, as part of a payment and settlement system, should be designed and operated from the perspective of the entire financial system. Secondly, for the design of the CBDC system, complementarity and minimal intervention were presented as a principle. CBDCs should not be aimed at deterring or crowding out non-cash payment instruments in the private sector or payment operations based on them. As a basic principle, CBDC should at least intervene within the scope to support the functioning of payment system and to promote innovation and competition in the payment field. Thirdly, in particular, when general purpose CBDCs are introduced, the problem of personal data protection is serious. In this regard, the principle of anonymity of cash under the monetary law and the minimum necessary rule under the data protection law must be observed.
<Keywords>
CBDC, legal tender, complementarity and minimal intervention, anonymity of cash, minimum necessary rule