International financial authorities and the world’s 20 largest economies set official standards for the regulation and issuance of sovereign digital currencies.
The G20, an organization made up of finance ministers and central bank administrators representing the European Union and 19 countries on each continent, cooperates with the International Monetary Fund (IMF), the World Bank (WBG), and the Bank for International Settlements (BIS) to end 2022. The central bank is preparing to formalize the use of digital currencies (CBDC) and determine the stablecoin framework.
According to the report, by the end of 2022, G20 members, IMF, World Bank and BIS will have completed the research and selection of regulatory stablecoin frameworks and CBDC designs, technologies and experiments. Stablecoins are digital currencies often linked to physical currencies such as the US dollar. In the report, it was stated that the IMF and the World Bank will have technical capabilities to facilitate CBDC transactions between countries by the end of 2025.
Countries will work to address the challenges faced by cross-border payments, without compromising minimum supervisory and regulatory standards to control risks to monetary and financial stability. According to the Financial Stability Board (FSB), a body established after the 2008 financial crisis, global stablecoin regulations and central bank digital currencies will be examined in this context.
The G20 roadmap on Stablecoin follows a joint report last week outlining a transnational front around digital currencies nationalized through BIS by seven central banks.
The report written by the Federal Reserve of the United States, the Central Bank of Canada, the European Central Bank (ECB), the Bank of England (BOE), the Swiss National Bank, Sweden’s Sveriges Riksbank and the Bank of Japan (BOJ), the central banks demand CBDCs in their countries. summarized its features. North American, European, and Japanese banks said CBDCs should look like cash in terms of ease of use across a range of payment types that are exchanged for existing money forms and pay little or no charge.
In the report, CBDC systems must also be tied to legacy financial technologies, resolve high-volume transactions instantly, resist cyber attacks and outages, and comply with regulations and monitoring that are currently in circulation and hold central bank power.
Will Benefit In Emergency Situations
In the report, it was stated that CBDCs could improve cross-border payments, resist similar corporate digital currencies such as Facebook Libra, and transfer emergency fund payments to consumers during the coronavirus outbreak. However, according to the report, CBDCs will not be anonymous and self-powered. In short, they will work differently than cryptocurrencies.
Bitcoin transactions are conducted on a blockchain network that masks and deletes personal data of central actors, while central banks will provide access and visibility into CBDC payments and individuals’ identities.
ECB and BOJ also announced that they are considering releasing CBDC this month. An ECB report said the decision to issue a digital euro would be announced in April next year. BOJ officials said the digital yen experiments started in the spring and called for a concerted effort to match China’s digital yuan, the largest central bank digital currency ever being tested.