A Central Bank Digital Currency (CBDC) should “support and do no harm” the ability of monetary regulators to fulfill their responsibilities in terms of ensuring monetary and financial stability. The finance ministers and heads of central banks of the Group of Seven (G7) countries stated this in the published recommendations.
G7 finance leaders met in Washington on Wednesday; to discuss central bank digital currencies, and they agreed on 13 public policy principles for their implementation. The G7, which is formed of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; believes that CBDC issuance should complement cash, acting as a liquid and secure settlement asset tied to existing payment systems. To protect user data, such a tool must comply with strict standards of confidentiality, transparency and accountability.
“Any CBDC should be based on long-standing public commitments to ensure transparency; the rule of law and sound economic management,” the document says.
The issue of stablecoin regulations
According to the G7, international coordination and cooperation on these issues will ensure that innovations in the public and private sectors will be effective and at the same time safe for users. As well as the financial system as a whole.
The leaders of the Group of Seven also touched upon the issue of regulation of stablecoins. In their opinion, issuers of such instruments should ensure compliance with regulatory standards and eliminate financial stability risks even before the launch of the latter.
In 2020, the G20 Financial Stability Board (FSB) made a similar statement. The report said that such coins must comply with existing regulatory standards. Before launch and eliminate risks to financial stability. As well as adapt to new regulatory rules if necessary.
A national digital currency
China has been leading the way toward issuing a digital currency. While G7 central banks have been working to establish common standards for issuing CBDCs as some experiment. None of the G7 member countries has launched a national digital currency yet, but many of them are developing projects in this area.
Recall that in April, the Bank of England and Her Majesty’s Treasury created a joint working group to study the CBDC. At the same time, the regulator placed seven vacancies in the digital currency research group.
In September, the Economic Affairs Committee of the House of Lords began studying the central bank’s digital currencies. Stakeholders were asked to answer ten questions. Including providing opinions on the risks and benefits of CBDC, as well as tracking and privacy issues.