The G7 is considering measures to support developing countries in introducing central bank digital currencies (CBDCs) that meet appropriate international standards. Japanese Finance Minister Masato Kanda announced this during the G7 meeting on April 11th. Japan is chairing the G7 this year, and CBDC is one of the main themes of discussion.
Finance Minister Kanda emphasized the need for transparency and sound governance to address the risks posed by CBDC development. He also stated that in 2023, helping developing countries implement CBDCs in line with appropriate international standards would be a priority.
The G7 has already published standards that CBDCs must adhere to, including not harming the existing financial system, strict standards for privacy, transparency, and data protection, and considerations that countries should take before issuing a CBDC. These standards are known as the “Public Policy Principles for CBDC for Retail.”
Kanda also highlighted the risks posed by the rapid innovation of digital technology, such as cybersecurity, the spread of false information, social and political divisions, and the risk of destabilizing financial markets. In addition, the FTX bankruptcy in November last year has led to a consensus around the world to tighten regulations on cryptocurrencies.
The International Monetary Fund (IMF) also released a report in March on the “macro-financial impact of cryptocurrencies,” arguing that if the spread of virtual currencies and stablecoins continues, it will pose risks to monetary policy, exchange rate management, capital movement control measures, and more.
The G7 plans to issue a joint declaration addressing the potential risks posed by cryptocurrencies to the financial system. The intention is to increase industry transparency and consumer protection, among other things. As the G7 continues to discuss CBDCs and cryptocurrency regulation, we can expect further updates in the coming months.
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