CBDC: G7 Finance Ministers Reach Agreement
Experts from the G7 financial group came to a consensus on 13 public policy principles for central bank digital currencies (CBDC), providing opportunities for the further spread of CBDC in the world’s leading economies. However, the U.S. Treasury Department reports that the principles of public policy include transparency, good economic governance, and respect to the law.
The aim of the policy is to promote innovation and the development of the latest digital currencies for retail use. In a joint statement, senior financial and central bank officials from the G7 emphasized that monetary innovation can be beneficial. Nevertheless, they need to be limited to regulations that address possible public policy implications more broadly.
Officials believe that central banks’ digital currencies will eventually equal cash. According to them, ensuring close international coordination and collaboration on these issues helps ensure that innovations in the public and private sectors provide both domestic and cross-border benefits. In addition, such innovations will meet the security requirements of both users and the financial system as a whole.
The statement came as financial officials met in Washington, D.C., as part of a series of meetings between World Bank and International Monetary Fund experts chaired by British Chancellor Rishi Sunak. In an official statement, executives said the central bank’s digital currencies would eventually exist alongside cash. They will also provide a reliable and liquid form of alternative for efficient and digital payments.
However, the following developments are also worth mentioning. While the CBDC draws the attention of politicians, the opinion of the public is usually affected, expressing fears that the CBDC system is capable of presenting some kind of alternative to the standard rules. Nevertheless, Jens Weidmann, a member of the Governing Council of the European Central Bank, recently sharply condemned this, saying that the move to CBDC does not imply that the standard fiat system will become an endangered species. Weidmann also noted that the use of CBDC could lead to healthy competition among monetary institutions, and that the institutions themselves were not eager to make demands for additional security.
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