G7, the group of 7, has reaffirmed its past comments on stablecoins and its opposition to the ones that are not in alignment with the relevant legal, oversight, and regulatory requirements.
The comments were contained in the communique that was released on June 5 after the G7 meeting of central bank officials and finance ministers in London.
Digital assets and stablecoins, for several years now, have been in the sight of the G7 more broadly. In about late 2019, a report was published by the G7 on stablecoins declaring that in them are potential benefits and legal, regulatory, and cybersecurity risks as well. According to the G7, on a global scale, stablecoins could pose financial stability and monetary policy risks.
The report of the group at the time stated that “These risks are very systematic and the merits required further study.” The observers of the movements of the G7 have interpreted them to have referred to projects like Diem that was previously known as Libra, which was initiated by the social media leader Facebook and began to receive criticism from the regulatory bodies across the world.
The communique released on June 5 indicated that the position of the G7 on the issue has not shifted at all in time.
As noted in the communique:
“We reaffirm that not global stablecoin should be allowed to begin operation unless the issues around the relevant regulatory, oversight, and legal requirement are addressed adequately through a substantial design and by aligning to the applicable standards. We are much committed to the international cooperation to uphold the common standard, as well as by supporting bodies that set standards internationally in reviewing the standards that are existing already and emphasizing the advantage of bridging any gaps identified. We support the ongoing work of the FSB in reviewing the supervisory, oversight, and regulatory challenges attached to the implementation of its High-Level Recommendations for the global arrangements of stablecoins.”
The Work of CBDC
The communique from the G7 also noted their collective interest in CBDCs, – central bank digital currencies – which are being considered for implementation by several central banks in the world. First China, has done some sort of different public tests in different cities of the country. While the supporters of CBDCs mentioned that it is a better alternative for cash, the critics mentioned that it would only allow stricter financial surveillance.
Based on the G7’s communique, the G7 central banks are “looking at the challenges, opportunities as well as the financial stability and monetary policy implications of the CBDCs.”
Unlike the previous statements from the G7, the new communique expresses the preferred design for the CBDCs, and there will be a more formal expression to it later in the year.