G7 to prioritize helping developing nations launch CBDCs
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(Kitco News) - The Group of Seven (G7) advanced nations – which is comprised of Britain, Canada, France, Germany, Italy, the US and Japan – is scheduled to meet in Hiroshima, Japan next month to discuss a wide range of topics, including cryptocurrency policy and central bank digital currencies (CBDCs).
While speaking at a seminar in Washington DC on Tuesday, Masato Kanda, Japan's Vice Minister of Finance for International Affairs, told the audience that the G7 intends to prioritize how they can help developing countries introduce CBDCs while ensuring compliance with international standards.
“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,” said Kanda. “We have to address risks from the development of CBDCs by ensuring factors such as appropriate transparency and sound governance.”
"As a priority of this year, the G7 will consider how best to help developing countries introduce CBDC consistent with appropriate standards, including the G7 public policy principle for retail CBDC," he said.
Previous reports indicated that crypto regulation would be a primary focus at the 49th G7 summit in Hiroshima, with officials ultimately looking to prepare a joint declaration representing a shared position on the regulation of crypto. The statement would address the potential risks that digital assets could pose to the global financial system and would call for stricter measures that require increased transparency from crypto firms and enhanced consumer protections.
“The collapse of FTX was a serious wake-up call on the need for proper consistent regulation across borders. Finalizing FSB's [Financial Stability Board] work to develop high-level recommendations on crypto asset activities on the market and on global stablecoin arrangement is important and the effective implementation of this recommendation is also crucial,” Kanda said.
He went on to acknowledge that collaborating on cryptocurrency policy is a work in progress, as not all countries are on the same page regarding how to approach the technology. “For crypto assets, there are a bit of diverging views among countries. But consensus is definitely that we need more regulation, particularly after the FTX shock,” he said.
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Included in the agenda for the G7 meeting will be a discussion on a public policy principle for retail CBDCs, which would be used by the general public in their everyday transactions, as opposed to wholesale CBDCs, which are used by institutions.
Debt vulnerabilities of middle-income countries will also be addressed, according to Kanda, who noted that it might be “a bit difficult” to see concrete results for countries like Zambia, Ghana and Ethiopia when asked what the accomplishments for debt talks could be.
The G7 is not alone in its plans to develop regulations for digital assets as G20 countries have also decided to adopt a common framework for digital assets, but that framework is still being developed. The International Monetary Fund (IMF) and the Financial Stability Board (FSB) have been tasked by the G20 with creating a synthesis paper for global crypto rules by the start of Q4.
Primary points of interest for the G20 include risk management and plans to deal with any potential financial shocks or widespread collapses.