G7 leaders issue central bank digital currency guidelines

Group of Seven advanced economic nations has been discussing central bank digital currencies (CBDCs) this week, concluding that they should “do no harm” and meet rigorous standards.

Finance leaders from the G7 met in Washington on Oct. 13 to discuss central bank digital currencies and endorsed 13 public policy principles regarding their implementation.

The G7, which comprises Canada, France, Germany, Italy, Japan, the U.K., and the U.S., mandated that any newly launched CBDCs should “do no harm” to the central bank’s ability to maintain financial stability. In a joint statement, G7 finance ministers and central bankers said:

“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.”

It added that CBDCs would complement cash and could act like liquid, safe settlement assets in addition to anchoring existing payments systems. Digital currencies must be energy efficient and fully interoperable on a cross-border basis, the statement added.

Leaders from the G7 nations confirmed that they had a shared responsibility to minimize “harmful spillovers to the international monetary and financial system.”

CBDC issuance should be “grounded in long-standing public commitments to transparency, rule of law, and sound economic governance,” the statement continued. A G7 nation has yet to issue a CBDC but several such as the United Kingdom are actively researching the technology and economic impacts.

Related: Cointelegraph predictions for the first 5 CBDCs of 2021–2022

Echoing a similar statement made by the larger G20, they reiterated that no global stablecoin project should begin operation until it addresses legal, regulatory, and oversight requirements. The comments may be in reference to Facebook’s planned Diem cryptocurrency which has raised red flags for financial leaders and central bankers.

The U.S. has been dragging its feet with CBDC plans and the Federal Reserve remains highly skeptical about digital dollars. As reported by Cointelegraph in September, America is in danger of being left behind technologically and financially if it doesn’t start seriously considering its own CBDC.

China is already way ahead of the pack with its digital yuan, and its latest crackdown on crypto is likely to be part of its grand plans to further promote and control central bank monetary flows.


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Following The Decade-Long IMF Playbook

The below is from a recent edition of the Deep Dive, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

The subject of today’s Daily Dive will be the playbook that is seemingly being followed by G7 governments and global central banks. While some may be skeptical that there is a coordinated campaign or playbook, the following paper released by the International Monetary Fund (IMF) in March 2011 may persuade you otherwise.

The paper, “The Liquidation of Government Debt,” outlined how governments and central banks could go about reducing public and private debts. Below is the abstract of the paper.


“Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of “financial repression.” Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks. In the heavily regulated financial markets of the Bretton Woods system, several restrictions facilitated a sharp and rapid reduction in public debt/GDP ratios from the late 1940s to the 1970s. Low nominal interest rates help reduce debt servicing costs while a high incidence of negative real interest rates liquidates or erodes the real value of government debt. Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation. Inflation need not take market participants entirely by surprise and, in effect, it need not be very high (by historic standards). For the advanced economies in our sample, real interest rates were negative roughly ½ of the time during 1945-1980. For the United States and the United Kingdom our estimates of the annual liquidation of debt via negative real interest rates amounted on average from 3 to 4 percent of GDP a year. For Australia and Italy, which recorded higher inflation rates, the liquidation effect was larger (around 5 percent per annum). We describe some of the regulatory measures and policy actions that characterized the heyday of the financial repression era.”

The most alarming aspect of the paper is the fact that the playbook laid out a decade ago seems to be being followed to a tee. Most specifically, financial repression by capping interest rates while letting inflation run hot.

With the consumer price index (CPI) continuing to run far above the Federal Reserve funds rate, real yields are negative across the treasury yield curve. In other words, bond holders are getting their interest payments while their principal decays in value (refer to abstract: “financial repression includes directed lending to government by captive domestic audiences [such as pension funds]”).

Alarmingly, G7 governments appear to be following a playbook designed to cap interest rates and let inflation run hot.

Source: Yardeni

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G7 Set to Release the Guidelines for the Creation of CBDCs

The Group of Seven (G7) industrialized nations are looking forward to accepting the proposals of a draft which seeks to enshrine some set of standards in the creation and issuance of Central Bank Digital Currencies (CBDCs).

According to the Japan Times, neither of the members of the G7 including the US, Italy, Japan, Canada, Britain, France, and Germany have confirmed they will be implementing a CBDC, and the draft contains as many as 13 recommendations.

The G7, according to the report understands that the decision to develop a CBDC is a sovereign matter, however, it noted that “by setting out a common set of principles, and underscoring the fundamental importance of shared values such as transparency, rule of law and sound economic governance, these principles can guide and inform exploration of retail CBDC in the G-7 and beyond.”

Amongst the issues, the draft proposal will seek to address the development of national and regulatory policies for the proposed digital money. Accountability standards and privacy must also be important factors that should be considered by countries looking to implement a CBDC.

The G7 will also aim at pushing countries with CBDC agenda to consider robust safeguards that can protect currency substitution with other countries.

“Where overseas access to a jurisdiction’s CBDC could leave other countries vulnerable to currency substitution or other spillovers, collaborative work to design and implement safeguards, particularly through relevant international organizations, can help mitigate negative effects,” it said.

As reported by Blockchain.News on October 6, the International Monetary Fund (IMF) president Kristalina Georgieva has recently said that about 110 countries have CBDC development at some stage.

While the G7 is a fraction of these numbers, they notably have such influence that can make the difference is passed off by the members when the Finance Chiefs of this body meet on Wednesday.

Above all, the draft recommendation will also seek to foster currency interoperability, albeit, with standards that can help prevent financial frauds, and the risks of evading sanctions.

Image source: Shutterstock


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G7 Inks New Taxation Deal, What is in it for Crypto Firms?

The institution of seven leading industrial countries, known as the Group of Seven (G7), has agreed to request multinational corporations (MNC) to pay more taxes.

According to a BBC report, the countries including the United States, United Kingdom, Germany, Italy, France, Canada, and Japan agreed in principle on a minimum tax rate of at least 15% for big firms operating in various locations worldwide. Some of the firms billed to be impacted include but not limited to Facebook, Amazon, Microsoft, Spotify, and others.

The deal was agreed upon to forestall the use of “Tax Havens,” or countries that offer very low corporate taxes to evade paying taxes by these firms. Based on the new deal, companies will now pay more taxes in regions where they do business, a deviation from the norm in which firms can declare their profits where they are most at an advantage.

The deal will now be proposed to the G20 with anticipation by other big names, including China, Russia, and Brazil, to sanction the move in a bid to take it global.

How Does This Affect the Crypto Ecosystem?

There are emerging companies in the digital currency ecosystem that are set to be impacted by this new arrangement. As the industry matures, we have started seeing firms offering core digital currency services debuting nationally recognised stock exchanges such as Coinbase Global Inc, with more others in the pipeline. 

Per the new taxation deals, blockchain and cryptocurrency-centric firms will also not have tax havens as the likes of Binance exchange have been accused of evading taxes. The areas where they do businesses are the areas they will get to pay more taxes, a move that will become more pervasive if the decision is made global.

Like the other multinational companies like Facebook, crypto firms will also continue their business as usual, except they may need to pay more taxes than they have done. 

Image source: Shutterstock


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G7 Will Meet to Discuss CBDC and Digital Tax this Week Says Japan’s Finance Minister

The Group of Seven (G7) will meet on Feb.12 to discuss central bank digital currencies (CBDC), digital taxation and global debt according to Japan’s Finance Minister Taro Aso.

G7 Will Meet to Discuss CBDC and Digital Tax this Week Says Japan’s Finance Minister

Japanese Finance Minister Taro Aso announced today that the G7 financial leaders would kick off debate on Friday on emerging market debt problems, implementation of digital taxation and central bank digital currency.

The G7 is an inter-government cooperation of seven of the world’s largest economies—the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom.

Britain will chair the meeting of G7 finance ministers and central bank governors to try to map a way out of the global economic crisis inflicted by COVID-19 and find a solution to an international tax wrangle.

As announced by Japan’s Minister Aso, the meeting will begin with the G7 leaders discussing the implementation of digital taxation and emerging debt problems and will also include CBDC.

The G7 announced last October that the regulation of digital currencies was now a priority of the group and have called for legislation to govern digital payments.

The G7 statement released last October statement also highlighted that the adoption of CBDC’s could create significant efficiency savings and greatly reduce friction in the payments sectors of its member states.

Image source: Shutterstock


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G7 to discuss CBDC and digital taxation this week

Japanese Finance Minister Taro Aso has revealed the G7’s financial leaders will discuss central bank digital currencies during a meeting on Feb. 12.

The meeting will be chaired by Britain, with representatives from the world’s largest economies set to discuss strategies for navigating their way out of the global economic crisis caused by the coronavirus pandemic.

Friday’s meeting will commence on the topic of CBDCs, but the minister noted the G7 will also discuss the implementation of digital taxation and emerging debt problems.

The G7, or Group of Seven, is an intergovernmental organization consisting of the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom.

The G7 has recently pushed to prioritize the regulation of digital currencies, with the organization reiterating its October statement calling for robust legislation to govern the digital payments sector during a meeting last month.

The October statement also noted CBDC’s could realize significant efficiency savings and reduce friction in the payments sectors of G7 member states.

The G7’s meeting comes as China makes major progress in rolling out its Blockchain Service Network, or BSN, with “big four” consulting firm Ernst & Young announcing it will deploy two blockchain-powered products on the BSN last week. The BSN is the first blockchain network to be developed and maintained by China’s central government.


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G7 Nations Discussing Need to Regulate Crypto Assets, Says US Treasury Department

Finance leaders from the world’s largest economies are tackling the future of global crypto assets regulation. The US Treasury says finance ministers and central bank governors from G7 countries – United States, Canada, France, Germany, Italy, Japan, and the United Kingdom – expressed their strong support for the need to regulate cryptocurrencies and other digital […]

The post G7 Nations Discussing Need to Regulate Crypto Assets, Says US Treasury Department appeared first on The Daily Hodl.


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