According to Masato Kanda, Japan’s top currency diplomat, the Group of Seven (G7) advanced economies will discuss ways to help developing countries implement central bank digital currencies (CBDC) in line with international standards.
This will be a key topic during Japan’s chairmanship of the G7 talks this year, as the global community faces challenges from rapidly advancing digital technology. Kanda emphasized the need to manage risks related to CBDC development, including transparency and governance. The G7 will prioritize developing countries’ introduction of CBDC, consistent with the G7 public policy principle for retail CBDC.
China has been a leading country in issuing a digital currency, while G7 central banks are working on common standards for CBDC experiments. Digital technology provides benefits but also creates challenges such as cybersecurity, misinformation, social and political divides, and the risk of destabilizing financial markets.
Policymakers are urged to create regulation across borders, especially after the collapse of the crypto exchange FTX in 2022.
Another priority for the G7 talks is to address debt vulnerabilities in some middle-income countries. Kanda admitted it might be challenging to achieve concrete results for countries like Zambia, Ghana, and Ethiopia, but he hopes for progress on Thursday with the launch of a creditor’s committee initiated by Japan, France, and G20 chair India for Sri Lanka.