Link: https://economictimes.indiatimes.com/tech/tech-bytes/g7-finance-leaders-lay-out-guidelines-for-central-bank-digital-currencies/articleshow/87012431.cms
Date: October 14, 2021
Media: The Economic Times
- What happened?
The G7, a group formed by some of the seven most influential countries in the world (Germany, United Kingdom, Japan, France, Italy, the United States and Canada), is stating that their financial systems are willing to support the creation of digital currencies. The main issue is that it needs to provide rigorous standards of privacy, transparency, and accountability for protection of user data. Also, in the article is stated that a central bank digital currency (CBDC) could help the flow of economy with liquidity, representing a safe-settlement asset that would be ideal to perform as an anchor for the whole payment system.
- Whom and where it affects?
This possible measure directly affects the economic system of the G7, and also the organizations they belong to (i.e. The European Union, in the case of France or Germany), but also, it would be a gamechanger in normal people’s lives, since the governments could arguable have more control over theirs population’ monetary movements.
In the long run, we estimate that, if given the opportunity, it would restructure the global economy as we know it, so technically everyone around the world would be splashed sooner or later.
- What sort of public or private institutions are involved?
Mainly, it would be the G7 Central Banks that are involved, since they will be the ones issuing and regularizing the virtual money and ensuring compliance with their rigorous privacy standards, to modernize financial systems and speed up both domestic and international payments in a safe way.
Also, It is expected that private banks will also be changing their intern structure to cope with these groundbreaking changes.
- Why is it important for Banking and Finance?
This is important because the Central Bank of each country rules the rest of the Banking of its own country, as main responsible of guaranteeing the stability of its currency. Therefore, the rest of financial entities, public or private, will be heavily encouraged to embrace Central Banks’ guidelines.
So, on the bottom line, if this measure is adopted, all the Banking systems will change, including the way people and companies invest.
- What do you think will be the consequences in the foreseeable future?
We think it is a risky move over the future of the world economy, since not many Central Banks have evolved this way and, with the ‘Boom’ of Cryptocurrencies like Bitcoin, Ethereum and many others revolutionizing the way people see finances, it is definitely a step forward that will shape the rest of the 21th century, the era of technology.
If the G7 Central Banks carry out this financial regulation, we think it will not be too long before the rest of countries start implementing these measures too, just because it is better for governments to avoid fraud risk and control people’s debts, payments and other aspects.
Also, we do not think it will be bad for the people’s privacy when it comes to private external companies, because they will not, assumably, be able to trace nor to access to the public systems of the Central Banks.
KEYWORDS: central banks, digital currency, G7, financial stability, payments sistem