G7 finance group endorses policy principals for retail CBDCs

Finance officials from the G7 have endorsed 13 public policy principles for retail central bank digital currencies (CBDCs).

According to Reuters, the group claimed that CBDCs should be grounded in transparency, the rule of law and sound economic governance.

The G7 officials said the central bank money in the form of CBDC would complement cash instead of replacing it, and could act as a liquid, safe settlement asset and an anchor for the payments system. They added that the 13 principals were meant to support policy and design deliberations within and beyond the G7.

Rigorous privacy standards, cybersecurity, user data protection, transparency and how information will be used and secured were all stressed as important by the G7 group.

The CBDCs should also be energy efficient and operate in an open, transparent and competitive environment, and should be interoperable on a cross-border basis. Also, the need to minimise any harmful spillovers to the international monetary and financial system were also stressed.

The Group of Seven finance ministers and central bankers underlined in a statement, “Innovation in digital money and payments has the potential to bring significant benefits but also raises considerable public policy and regulatory issues.

“Strong international coordination and cooperation on these issues helps to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.

“We reaffirm that any CBDC should be grounded in our long-standing public commitments to transparency, the rule of law and sound economic governance. Any CBDC must support, and ‘do no harm’ to, the ability of central banks to fulfill their mandates for monetary and financial stability.”

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