CBDCs would complement cash and should not be harmful to the monetary system, according to G7 financial leaders.
This week, the Group of Seven (G7) advanced economies examined central bank digital currencies (CBDCs), concluding that they should “cause no damage” and adhere to strict guidelines.
On Wednesday, G7 finance leaders gathered in Washington to discuss central bank digital currencies and agreed 13 public policy principles for their deployment.
Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, known as the G7, stipulated that any newly created CBDCs “cause no harm” to the central bank’s authority to preserve financial stability. G7 finance ministers and central bankers issued a joint statement saying:
Any central bank digital currency (CBDC) should be grounded in long-standing public commitments to transparency, rule of law and sound economic governance,Reuters
CBDCs would be a supplement to cash, acting as liquid, secure settlement assets as well as anchoring existing payment systems, according to the report. The statement goes on to say that digital currencies must be energy efficient and completely cross-border interoperable.
G7 leaders agreed that they share responsibility for minimizing “harmful spillovers to the world monetary and financial system.”
The statement went on to say that CBDC issuing should be “based on long-standing public commitments to openness, rule of law, and solid economic governance.” Although no G7 country has issued a CBDC, numerous countries, like the United Kingdom, are actively investigating the technology and economic implications.
They reaffirmed that no global stablecoin initiative should commence operations unless it satisfies legal, regulatory, and supervisory concerns, echoing a similar comment made by the wider G20. The remarks might be in response to Facebook’s upcoming Diem cryptocurrency, which has generated concerns among financial executives and central bankers.
The US has been dragging its feet on CBDC plans, and the Federal Reserve is still wary about digital currencies. According to a September study by Cointelegraph, America risks falling behind technologically and monetarily if it does not begin seriously adopting its own CBDC.
With its digital yuan, China is already a step ahead of the pack, and its recent assault on cryptocurrency is likely part of the country’s broader intentions to promote and regulate central bank monetary flows.