According to Japan’s top currency diplomat Masato Kanda, the Group of Seven (G7) major economies will think about how to best assist developing nations in introducing central bank digital currencies (CBDC) in accordance with relevant international norms.
In an effort to address the issues the international community faces from rapidly advancing digital technology, the move will be among the major topics of G7 negotiations that Japan will chair this year, he added.
By assuring elements like sufficient transparency and solid governance, they must handle the risks associated with the development of CBDC, Kanda, vice finance minister for foreign relations. The G7 would prioritize helping developing nations establish CBDC in accordance with suitable standards this year, including the G7 public policy concept for retail CBDC, he said at a conference in Washington.
China has been leading the pack in the issuance of a digital currency outside of the G7. While various G7 central banks continue with their experiments, they have established uniform norms for issuing CBDCs.
According to Kanda, the rapid advancement of digital technology brings with it a number of advantages as well as completely novel difficulties, including those related to cyber-security, the propagation of false information, social and political differences, and the potential for financial market instability.
According to him, the failure of the cryptocurrency exchange FTX last year “was a serious wake-up call” for policymakers to establish international regulation.
There are some slight differences in opinions between nations regarding crypto assets. However, there is general agreement that further regulation is necessary, especially in light of the FTX shock, Kanda added.
Addressing the financial vulnerabilities of some middle-income nations will also be a top emphasis of this year’s G7 negotiations, according to Kanda, one of the decision-makers assembling in Washington this week for the spring meetings of the International Monetary Fund (IMF).
When questioned about what the debt discussions would achieve this week, Kanda responded that it might be “a little difficult” to see tangible progress for nations like Zambia, Ghana, and Ethiopia.
With the creation of a creditor’s committee on Thursday, which was proposed by Japan, France, and the G20 chair India, Kanda added, “Hopefully we can have progress for Sri Lanka.”
