The G7 representing finance ministers and central bank governors from the United States (US), Canada, the United Kingdom (UK), Germany, France, Italy and Japan are reportedly working to formalize the use of central bank digital currencies (CBDC) in in the banking system.
The effort is in collaboration with the International Monetary Fund (IMF), the World Bank and the Bank for International Settlements (BIS).
It is expected that the mission, which also includes the legal framework of stablecoin, research and selection of CBDC design, technology and experiments, will find a turning point in 2022.
Meanwhile, by the end of 2025, based on technical capabilities, the IMF and the World Bank will be able to upgrade CBDC transactions between countries.
The countries involved will review the scope of the new multilateral platform, global stablecoin arrangements and the central bank's digital currency to highlight the challenges facing cross-border payment systems including minimal supervision, as well as standard rules to control monetary and financial stability risks.
The CBDC system should be connected to old financial technology to complete large transactions quickly, immune to cyber attacks and, in accordance with the rules and legitimate monitoring of managed cash and that maintain central bank power.
In fact, CBDC can improve cross-border payments, especially those involving the transfer of emergency fund payments to consumers during disasters such as the COVID-19 pandemic.
The European Central Bank (ECB) and the Bank of Japan (BOJ) this month are looking for opportunities to announce the CBDC.
The launch of the digital euro will be announced in April 2021. Meanwhile, for the digital yen, BOJ officials said the effort is still under study.
The BOJ also hopes that the G7 can further enhance its efforts to compete with the digital yuan which is currently the most expensive central bank digital currency.
