G-7 Pushes The Introduction of CBDCs

Apr 12, 2023

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The G-7 countries introducing CBDCs and toughening global crypto regulations.

Accelerated Discussions

The Group of Seven (G-7) countries are prioritizing how they can better help developing nations introduce their central bank digital currencies (CBDCs), while addressing challenges such as transparency and governance.

Masato Kanda, Japan’s Vice Minister of Finance for International Affairs pointed out the pros and cons of digital technologies:

Fast-moving digital technologies provide tremendous benefits in many years including cheaper and faster cross-border payments available to a larger public, but the new technologies have onset of challenges.

Japanese Prime Minister Fumio Kishida will host this year’s G-7 summit in Hiroshima, and discussions regarding crypto regulation are expected to accelerate ahead of a meeting of finance ministers and central bankers from the G-7 countries in mid-May.

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StandardsGlobal Cryptocurrency Regulations

The G-7 plans to make global cryptocurrency regulations tougher, with a focus on increasing business transparency and consumer protection. The collapse of the major cryptocurrency exchange FTX in November highlighted the poor governance of the industry, leading G-7 countries to seek collective efforts in a leaders’ declaration. The plan follows recent bank failures in the US that have rattled investors. Silicon Valley Bank, which specialized in dealing with technology startups, and Signature Bank, which served crypto clients, were among the banks that failed.

Global Standards In The Making

Of the G-7 members, Japan already has cryptocurrency regulations, while Canada and the United States currently apply existing financial regulations. While the legal status of virtual assets and rules about them vary by country, G-7 countries hope to formulate global standards to regulate crypto assets. IMF directors generally agree that crypto assets should not be granted official currency or legal tender status.

Joint Synthesis Paper

The Financial Stability Board (FSB) and the International Monetary Fund have been tasked by the Group of 20 major economies to produce a jointly produced synthesis paper for global crypto rules by September or October. This comes after the Financial Stability Board released a set of recommendations in October 2021 toward creating a regulatory framework. The recommendations included making crypto assets subject to regulations for commercial bank activities. While the FSB plans to announce its final version of the framework in July 2022, the International Monetary Fund released a policy paper in February 2022 outlining key elements to be considered by each country in the development of comprehensive and coordinated rules following the spread of crypto.

Opposition

However, several users and even politicians do not share the views of these countries. Crypto users see state issued CBDCs as a new way for the government to control its holders. Even some politicians have expressed their concern regarding these digital currencies stating that they will lead to “financial slavery”.

are slave money.

Resist.

— Lark Davis (@TheCryptoLark)

Summary

The meeting of finance ministers and central bank governors from the Group of 20 major economies in Washington is expected to discuss issues associated with crypto assets. G-7 countries hope to take the lead in formulating global standards for the regulation of crypto assets, aiming to increase business transparency and consumer protection. They want to prioritize how to help developing nations introduce their CBDCs while addressing challenges such as transparency and governance. G-7 countries aim to promote the benefits of fast-moving digital technologies such as cheaper and faster cross-border payments to a larger public.

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