Japan is set to take the lead as the chair of several meetings for the Group of Seven (G7) financial leaders this year, with the agenda including discussions on crypto policy and central bank digital currencies (CBDCs). The G7 is comprised of Japan, the US, France, Germany, Italy, Canada, and the UK, and will hold a summit in Hiroshima next month.
The G7 will explore ways to help developing economies adopt CBDCs while ensuring compliance with international standards. The ministers will also prioritize discussing public policy principles for retail CBDCs, which are intended for use by the general public. Wholesale CBDCs, on the other hand, would be developed for institutions.
Unlike cryptocurrencies such as Bitcoin and Ethereum, CBDCs are government-issued tokens pegged to fiat currencies and do not necessarily have to run on a blockchain or distributed ledger system. The G7 will also address risk management and ways to handle potential shocks and collapses in digital asset regulation.
In a seminar in Washington, Japan’s deputy minister of finance, Masato Kanda, emphasized the need to address risks from the development of CBDCs by ensuring appropriate transparency and sound governance. He also noted that the rise of crypto has brought threats to investor security and that not all economies share the same views on the matter.
While Japan is open to innovative financial technology and recently released a white paper with recommendations to boost the crypto industry, China has already taken the lead in CBDC development with its digital yuan. Transactions in the digital yuan reportedly surpassed $13.9 billion in August last year.
