G7 Finance Ministers and Central Bank Governors met last week to discuss global economic conditions, including cryptocurrency.
The committee was joined by Heads of the International Monetary Fund, World Bank Group, Organisation for Economic Cooperation and Development, and Financial Stability Board.
There were several important statements released in the meeting’s communiqué.
Digital innovation in payments is a key driver of economic progress and development, notably through faster, cheaper, more transparent and more inclusive cross-border payment services. The G7 highlights the opportunities and implications of Central Bank Digital Currencies (CBDCs) and their potential role in future payment transactions.
The G7 encourages jurisdictions exploring CBDCs to examine the international dimensions of CBDCs, in particular their cross-border use. Continued international cooperation will be important to understanding and minimising any “negative spillovers” to the international monetary and financial system.
3. Financial Stability Risks
The G7 supports the work by the FSB to monitor and address financial stability risks arising from all forms of crypto-assets, and welcomes increasing global cooperation to address regulatory issues associated with the use of crypto-assets.
4. Swift and comprehensive regulation
In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB, in close coordination with international standard-setters, to advance the swift development and implementation of consistent and comprehensive regulation of crypto-asset issuers and service providers, with a view to holding crypto-assets, including stablecoins, to the same standards as the rest of the financial system.
In relation to stablecoins, the G7 stated the following:
“We reaffirm that no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory and oversight requirements through appropriate design and by adhering to applicable standards.”
The G7 remains committed to high regulatory standards for global stablecoins, following the principle of same activity, same risk, same regulation.
It is evident, from the G7 perspective at least, that crypto projects will increasingly face greater international scrutiny, on par with traditional financial institutions. The statement that no global stablecoin project should begin operation is particularly alarming when there are already a number of international stablecoin projects in motion.