G7 financial leaders agree that digital currencies will replenish cash and should not be detrimental to the monetary system.
Central Bank Digital Currencies May ‘Do No Harm’
The group of seven of the world’s largest economies discussed the central bank’s digital currencies this week. The conclusion was that the currencies issued by the state must meet very strict standards and “do no harm” to the economy.
The G7 met in Washington on October 13 to discuss the issue of central bank digital currencies. They endorsed 13 public policy principles related to their implementation.
The G7 consists of Canada, France, Germany, Italy, Japan, the UK and the US. This group has ruled that newly launched central bank digital currencies “should not harm” the central bank’s ability to maintain financial stability. In a joint statement said the finance ministers and the central bankers of the G7 the following:
“Strong international coordination and cooperation in this area helps to ensure that innovation in the public and private sectors delivers domestic and cross-border benefits while being safe for users and the wider financial system.”
It added that the digital currencies would complement cash, not replace it. They could act as liquid, secure settlement assets in addition to anchoring existing payment systems. Digital currencies must be energy efficient and fully interoperable on a cross-border basis, the statement said.
Leaders of the G7 countries affirmed that they had a shared responsibility to minimize “damaging spillovers to the international monetary and financial system”.
Plans for Digital Currencies in the G7
The issuance of a digital currency should be “based on long-standing public commitments to transparency, the rule of law and sound economic governance,” the statement continued. No G7 country has yet issued a digital currency. A number of countries, such as the United Kingdom, are actively researching the technology and economic effects.
The US is not yet convinced of the usefulness of a digital currency. The Federal Reserve remains very skeptical about digital dollars. However, economists say America risks falling behind technologically and financially if it doesn’t seriously consider a digital dollar.
China is already way ahead of the pack with its digital yuan. The latest crackdown on crypto is likely to be part of his grand plans to further promote and control the central bank’s money flows.