G7 Leaders Issue Central Bank Digital Currency Guidelines

The Group of Seven (G7) has been discussing central bank digital currencies (CBDCs) this week, arguing that they should be "harmless" and meet strict criteria.

On October 13, G7 financial leaders met in Washington to discuss central bank digital currencies and adopted 13 public policy principles for their implementation.

The Group of Seven, which includes Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, has stipulated that any new CBDC launched should "not impair" the central bank's ability to maintain financial stability. In a joint statement, G7 finance ministers and central bank governors said:

"Strong international coordination and cooperation on these issues can help ensure that innovations in the public and private sectors will deliver domestic and cross-border benefits, while being safe for users and the wider financial system."

The statement added that CBDC would complement cash and serve as a liquid, safe settlement asset in addition to underpinning existing payment systems. The statement also stated that digital currencies must be energy-efficient and fully interoperable on a cross-border basis.

The G7 leaders firmly believe they have a shared responsibility to minimize "harmful spillover effects on the international monetary and financial system".

The statement also said that the issuance of a CBDC should be "based on longstanding public commitments to transparency, the rule of law and sound economic governance." No country in the G7 has yet issued a CBDC, but several countries, including the UK, are actively researching the technology and economic implications.

They reiterated that no global stablecoin project should be launched until issues of legal, regulatory and supervisory requirements are resolved, in line with similar statements from the larger G20. The comments may be a reference to Facebook's planned Diem cryptocurrency, which has raised alarm among fiscal leaders and central bankers.

The U.S. has been dragging its feet on CBDC plans, and the Federal Reserve remains highly skeptical of a digital dollar. As Cointelegraph reported in September, the U.S. is in danger of falling behind technologically and financially if it doesn’t start seriously considering its own CBDC.

China has already led the world in digital yuan, and the latest crackdown on cryptocurrencies may be part of its grand plan to further facilitate and control the flow of money at the central bank.

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