According to reports, the Group of Seven (G7) organization has set its sights on aiding developing countries in the introduction of central bank digital currencies (CBDCs) that adhere to international standards.
During a recent speech in preparation for the International Monetary Fund and World Bank Spring 2023 meetings, Japan’s top currency diplomat Masato Kanda revealed that the move would be among the key themes of G7 discussions, alongside other grave issues like Russia’s invasion of Ukraine.
Kanda noted that G7 could address challenges the global community face from fast-moving digital technology by providing developing countries with detailed guidelines to develop CBDCs.
“We have to address risks from the development of CBDC by ensuring factors such as appropriate transparency and sound governance,” he said, adding:
“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.”
The G7 (Group of Seven) is an organization of the world’s seven largest so-called “advanced” economies, which consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States
On Wednesday, Japan would chair a G7 financial leaders’ meeting in Washington to discuss the global economy and financial markets, the strengthening of supply chains, and the Ukraine crisis, as per a report by Reuters.
With the rapid development of digital assets and the rise of CBDCs, governments around the world continue to struggle with the vast implications of crypto to their respective economies and financial systems.
The Japanese minister mentioned that the rise of digital technology has also introduced new challenges, such as cyber-security, the spread of misinformation, social and political divides, and the risk of destabilizing financial markets.
He claimed that the unprecedented collapse of cryptocurrency exchange FTX, which operated across more than 100 different jurisdictions, “was a serious wake-up call” for policymakers to create regulation across borders.
“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.”
CBDCs are digital money issued by central banks and pegged to fiat currencies.
Currently, 65 countries are in the advanced stage of CBDC development, and more than twenty central banks have launched their pilots, including China, Brazil, Japan, and Russia.
Citi Analysts Claims CBDCs Power Next Wave of Crypto Adoption
Analysts at global investment bank Citi believe that the rise of CBDCs and the tokenization of real-world assets would power the next wave of mass adoption of blockchain technology.
“This is likely to be driven by the adoption of central bank digital currencies (CBDCs) by large central banks as well as tokenized assets in gaming and blockchain-based payments on social media,” the experts wrote in a report titled “Money, Tokens, and Games: Blockchain’s Next Billion Users and Trillions in Value.”
The report estimated that more than $5 trillion of CBDCs could be circulating globally by the end of this decade. This would give almost 2 billion people the opportunity to experiment with digital currency
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