International financial institutions and the world’s 20 largest economies are setting official standards for regulating and issuing government digital currencies.
The Group of Twenty (G20) is an organization of finance ministers and central bank governors who represent the European Union and 19 countries on every continent. The organization said in a report today that it is working with the International Monetary Fund (IMF), the World Bank and the Bank for International Settlements (BIS) to officially use the Central Bank’s digital currency (CBDC) in the banking system.
According to the report, the G20 member states, the IMF, the World Bank and the BIS will complete the research and selection of the stablecoin regulatory framework, as well as the CBDC design, technology and experiment, by the end of 2022.
Stablecoins are digital currencies and are usually associated with physical currencies such as the US dollar. According to the report, by the end of 2025, the IMF and World Bank will have the technical capabilities to facilitate CBDC transactions.
The countries involved will examine new multilateral platforms and global stable currency agreements. They will also examine the scope of central bank digital currencies to address the challenges of cross-border payments.
Alliances Between Nations on Digital Currencies
The G20 published a joint report last week through the Bank for International Settlements. The report sets out a transnational front on nationalized digital currencies.
Last week’s report written by the United States Federal Reserve Bank, Bank of Canada, European Central Bank (ECB), Bank of England (BOE), Swiss National Bank, Sveriges Riksbank of Sweden, and Bank of Japan ( BOJ) highlighted features central banks need from the CBDC.
Banks in North America, Europe, and Japan stated that CBDC should be interchangeable with existing currency forms. It should also be similar to cash in terms of ease to use. The CBDC should also allow for multiple payment methods with little or no cost.
The European Central Bank and the Bank of Japan also announced earlier this month that they are considering issuing CBDC. A report by the European Central Bank said the decision to issue a digital euro will be announced in April next year. Bank of Japan officials said the digital yen experiment will begin in the spring. The bank also urged people to work together to match China’s digital Yuan. Currently, China’s largest digital currency is being tried by the central bank.