G7 to discuss digital currency standards, crypto regulation

April 12 (Reuters) – Group of Seven (G7) advanced economies will consider how best to help developing countries introduce central bank digital currencies (CBDCs) in line with appropriate international standards, Japan’s top currency diplomat Masato Kanda said on Tuesday.

The move will be among the key topics of the G7 discussions that Japan is leading this year, as part of efforts to address the challenges facing global society from fast-moving digital technology, he said.

“We need to manage risks from the development of CBDCs by ensuring factors such as appropriate transparency and sound governance,” Kanda, the deputy finance minister for international affairs, said at a seminar in Washington.

“As a priority this year, the G7 will consider how best to help developing countries introduce CBDC in accordance with appropriate standards, including the G7 Principle on Public Policy for Retail CBDC,” he said.

Outside of the G7, China has led the pack in issuing a digital currency. G7 central banks have set common standards for issuing CBDCs as some continue to experiment.

Kanda said the rapid innovation of digital technology brings various benefits, but also new challenges such as cyber security, the spread of misinformation, social and political divides and the risk of destabilizing financial markets.

The collapse of crypto exchange FTX last year “was a serious wake-up call” for policymakers to create cross-border regulation, he said.

“For crypto assets, there are slightly divergent views between countries. But the consensus is definitely that we need more regulation, especially after the FTX shock,” Kanda said.

Another priority in this year’s G7 talks will be to address debt vulnerabilities in some middle-income countries, said Kanda, who is among policymakers gathering in Washington for the spring meeting of the International Monetary Fund (IMF) this week.

Kanda said it may be “a little difficult” to see concrete results for countries such as Zambia, Ghana and Ethiopia, when asked what the performance of debt talks could be this week.

“For Sri Lanka, hopefully we can make progress,” with a plan to start a creditors’ committee on Thursday initiated by Japan, France and G20 leader India, Kanda said.

Reporting by Leika Kihara in Tokyo; Editing by Jamie Freed

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