G7 leaders release guidelines for central bank digital currencies

The G7 finance leaders agreed that CBDCs would complement cash and should not undermine the monetary system.

The Group of Seven (G7) has been discussing central bank digital currencies (CBDCs) this week, arguing that they should “do no harm” and meet strict criteria.

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

The G7, which consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, stipulates that any new CBDC should “not undermine” the ability of the central bank to maintain financial stability. In a joint statement, the G7 finance ministers and central bank governors said:

“Strong international coordination and cooperation on these issues can help ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the broader financial system.”

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

The G7 leaders were adamant that they had a shared responsibility to minimize "adverse spillovers to the international monetary and financial system."

The statement also said that the issuance of CBDCs should be "based on a long-standing public commitment to transparency, the rule of law and sound economic governance." No country in the G7 group has yet issued a CBDC, but several countries, such as the United Kingdom, are actively studying the technology and its economic implications.

They reiterated that no global stablecoin project should be launched until legal, regulatory and oversight requirements are resolved, in line with similar statements from the larger Group of 20. The comments may be a reference to Facebook's planned Diem cryptocurrency, which has raised alarm among finance leaders and central bankers.

The United States has been dragging its feet on its CBDC plans, and the Federal Reserve remains highly skeptical of the digital dollar. As Cointelegraph reported in September, if the United States does not start seriously considering its own CBDC, it will be in danger of falling behind both technologically and financially.

China has already taken the lead in the world in terms of digital yuan, and the recent crackdown on cryptocurrencies may be part of its grand plan to further promote and control the flow of central bank money. (Cointelegraph)