According to recent reports, the G7 group intends to help underdeveloped nations introduce central bank digital currencies (CBDCs) that comply with international norms. In a recent address in advance of the International Monetary Fund and World Bank Spring 2023 meetings, Japan’s senior currency diplomat Masato Kanda said that this move will be one of the major topics of G7 negotiations. Kanda pointed out that by giving poor nations comprehensive instructions on how to create CBDCs, the G7 might solve issues that the international community is having with rapidly advancing digital technology.
The seven greatest advanced economies in the world—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—are collectively known as the G7. Japan will preside over a gathering of the G7 finance leaders on Wednesday in Washington to talk about the state of the world’s financial markets, supply chains, and the Ukraine issue.
The development of digital technology has brought up new difficulties, including cyber-security concerns, the propagation of false information, social and political divisions, and the potential for financial market instability. According to Kanda, the unusual demise of the cryptocurrency exchange FTX, which operated in over 100 different countries, “was a serious wake-up call” for authorities to establish international legislation. He said that the G7 will think about how to support the introduction of CBDCs in developing nations in accordance with relevant norms, including the G7 public policy concept for retail CBDC.
CBDCs are digital coins that central banks produce and link to fiat money. Currently, 65 nations are at an advanced level of CBDC research, and more than 20 central banks, including those in China, Brazil, Japan, and Russia, have started their pilot programs. The growth of CBDCs and the tokenization of physical assets will drive the next wave of widespread use of blockchain technology, according to experts at the major investment bank Citi. By the end of this decade, researchers predicted that more than $5 trillion in CBDCs might be in circulation worldwide, offering over 2 billion individuals the chance to try out digital money.
