The Group of Seven advanced economic nations this week discussed central bank digital currencies (CBDCs), concluding that they should “do no harm” and meet rigorous standards.
G7 financial leaders met in Washington on October 13 to discuss central bank digital currencies and approved 13 public policy principles regarding their implementation.
The G7, which includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, mandated that any newly launched CBDCs should “not interfere” with the ability to the central bank to maintain financial stability. In a joint statement, G7 finance ministers and central bankers said:
“Strong international coordination and cooperation on these issues helps ensure that public and private sector innovation will deliver national and cross-border benefits while being safe for users and the broader financial system. “
He added that CBDCs would complement cash and could act as liquid and secure settlement assets in addition to anchoring existing payment systems. Digital currencies must be energy efficient and fully interoperable on a cross-border basis, the statement added.
The leaders of the G7 countries have confirmed that they share the responsibility of minimizing “adverse spillovers to the international monetary and financial system”.
CBDC’s issuance is expected to be “based on long-standing public commitments to transparency, the rule of law and good economic governance,” the statement continued. One G7 country has yet to issue a CBDC, but several, like the UK, are actively studying the technological and economic impacts.
Related: UKTN predictions for the top 5 CBDCs of 2021-2022
Echoing a similar statement made by the larger G20, they reiterated that no global stablecoins project should start operating until it meets legal, regulatory and supervisory requirements. The comments may refer to Facebook’s predicted Diem cryptocurrency, which raised red flags for financial executives and central bankers.
The United States is dragging its feet with the CBDC’s plans and the Federal Reserve remains very skeptical about digital dollars. As UKTN reported in September, America risks being left behind technologically and financially if it doesn’t begin to seriously consider its own CBDC.
China is already ahead of the pack with its digital yuan, and its latest crackdown on crypto will likely be part of its grand plans to further promote and control central bank money flows.