The Bank for International Settlements (BIS) published a report on Thursday, urging for a regulatory framework to prevent future fragmentation and private interest dominance in the Metaverse and digital economy.
TakeAway Points:
- In a report, the Bank for international Settlements seeks for a regulatory framework in the Metaverse
- The report calls on global regulators, policymakers, and central banks to draw out frameworks for the digital ecosystem.
- The framework will include interoperable payment technologies, central bank digital currencies, and consumer protection that will promote open, competitive access to the digital economy.
The BIS report
The BIS report underscores the need for interoperable payment technologies, central bank digital currencies, and consumer protections to ensure a more competitive and accessible digital economy.
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According to the report, this aims to safeguard the future of the digital system by protecting users and providing open, competitive, and inclusive platforms for all users, such as education, gaming, and e-commerce.
“To prevent virtual environments and money from becoming fragmented and dominated by powerful private firms, authorities may wish to reinforce efforts to promote more efficient, interoperable payments that can fulfill user demands”,
the report read.
However, the report emphasizes the role of Central Bank Digital Currencies (CBDCs) in creating financial infrastructure in the Metaverse by providing secure, efficient, and interoperable payment solutions, which could subsequently impact the economic and regulatory landscape of the Metaverse.
The emphasis on CBDCs gives a wider vision for a digital economy that promotes competition, consumer protection, interoperability, and data privacy principles.
Challenges and Potentials
Meanwhile, the BIS points out the risks of its potential fragmentation and the dominance of private firms as challenges and opportunities in the Metaverse. Hence, the report calls on global regulators, policymakers, and central banks to draw out frameworks that can “provide clear standards on data privacy, digital ownership, and consumer protection.”
“If the metaverse becomes macroeconomically relevant, the payment instruments that win in this competition may see a substantial boost in their overall adoption. This could influence their use in the real world too. In this light, central banks and financial regulators may have an interest in better understanding and influencing the choice of payment instruments in the metaverse.”
the report stated.
In addition, the report underlines the significance of efficient, open, and interoperable payment systems that will satisfy user’s demands, highlighting the importance of financial regulators and central banks working together in crafting the choice of payment instruments within the metaverse.
“regardless of which payment instruments are used, authorities will need to ensure compliance with anti-money laundering and combating the financing of terrorism regulations in order to safeguard market integrity.”
the report wrote.
The BIS aims to avoid situations where the digital space would be dominated by a few powerful entities, stifling innovation and restricting access.
