Guidelines for Central Bank Digital Currencies Adopted by G7 Finance Ministers and Bankers
G7 finance ministers have emphasized that any digital currency issued by a central bank must promote financial and monetary stability. Officials emphasized that state-issued currencies should also provide privacy, transparency, and data protection. The meeting agreed on 13 public policy principles for retail digital currencies, emphasizing that “CBDCs are not ‘cryptoassets.'”
Releasing the potential benefits of digital money and payments innovation, finance officials from the 7 largest economies addressed relevant public policy and regulatory issues at their most recent meeting, which also resulted in over a dozen guidelines for central bank digital currencies (CBDCs). The participants reiterated in a statement:
Any CBDC should be grounded in our long-standing public commitments to transparency, the rule of law and sound economic governance.
The G7 finance leaders stated after their meeting on Wednesday that a sovereign digital currency meant for use by people and companies must “support and do no harm” to a central bank’s ability to preserve monetary and financial stability. “A CBDC would supplement currency” and might act as a “anchor for the payments system,” they noted. It should also adhere to “rigorous standards” of privacy, transparency, and data protection, as well as be resistant to different dangers such as cyber attacks, fraud, and unauthorized usage.
The G7 finance ministers and central bankers recognize the potential significance of CBDCs in improving cross-border payments. At the same time, high-ranking officials understand their joint obligation to limit “harmful spillovers to the international monetary and financial system.”
The Group of Seven Issues 13 Public Policy Principles for Retail CBDCs
The contrasts between digital currencies issued by central banks, on the one hand, and cryptocurrencies and stablecoins, on the other, are underlined in a study released by the inter-governmental forum. “CBDCs are not ‘cryptoassets,'” the group’s financial executives underline, adding that the latter are not issued by a central bank and that fiat-backed digital currencies are a private entity’s obligation. CBDCs’ broader infrastructure, on the other hand, may include participants from both the public and private sectors.
Given that no G7 monetary authority has yet decided to issue its own digital currency, the authors have arranged their proposals by developing 13 public policy principles for retail CBDCs to aid policy debate. These guidelines, which have been separated into two categories: “Foundational Issues and Opportunities,” can be referred to by national governments and international organizations.
The G7 finance ministers think that “CBDCs should coexist with existing means of payment and should operate in an open, secure, resilient, transparent and competitive environment that promotes choice and diversity in payment options.”. While state-issued digital currencies are anticipated to make payments more accessible, quicker, and less expensive, the illicit finance principle emphasizes the commitment to limit their use in assisting crime.
The new G7 standards are the result of a June conference at which the group’s finance ministers decided to issue a set of common principles for central bank digital currencies. Several monetary authorities, including the Federal Reserve of the United States, the European Central Bank, and the Bank of Russia, are presently trying to design and issue CBDCs. The People’s Bank of China now has the most advanced initiative, having already conducted several testing with the digital yuan.