Coming Friday, February 12, finance ministers of the G7 nations will be having a virtual meeting for the first ministerial talks for 2021. Japanese Finance Minister Taro Aso has recently requested all G7 finance ministers to have an in-depth discussion on central bank digital currencies (CBDCs).
During a recent press conference, Aso called the need of introducing some strong policy measures by the G7 nations. “I think it’s important for us to thrash out [policy measures regarding] digital currency issued by central banks,” he added. This will be the first-ever meet among the G7 finance ministers and central bank governors after the Biden administration took charge last month.
Concerns Over China’s CBDC Developments
Over the last year, China’s central bank – People’s Bank of China (PBoC) – has accelerated its CBDC development. The Chinese central bank has been aggressively testing CBDCs across multiple cities in the country. During its ongoing Lunar New Year, China issued another $1.5 million worth of Digital Yuan to conduct two major nationwide trials.
Looking at these developments, the G7 Nations have been cautiously observing with concerns of China taking the lead in CBDC developments. The Digital Yuan development has raised concerns that it could replace other strong currencies used in global trade, reports the South China Morning Post.
CBDCs have taken the center-stage for top economic powers. ECB President Christine Lagarde has been much vocal about the CBDC developments as the Eurozone has already started working on a pan-Europe digital currency aka the Digital Euro.
On the other hand, the world’s sixth-largest economy India is also considering the option to have its own CBDC and will unveil its decision very soon. It will interesting to see what stand does global policymakers take going ahead and whether if we have a common policy framework and rules for CBDCs.