The Group of Seven Largest Economies have instructed the members to compete with stablecoins and Cryptocurrencies. The G7 body has asked the members to create a more robust financial system and to issue digital fiat if necessary.
As per a detailed report by its Working Group on Stablecoins, the body has recommended that the “central banks, individually and collectively, will assess the relevance of issuing central bank-controlled digital currencies in view of the costs and benefits in their respective jurisdictions.”
The report is titled “Investigating the Impact of global stablecoins”. It has concluded that the stablecoins that are successful globally can “pose challenges and risks to””
The Monetary Policy,
The International Monetary System, and
The authors of the report are quick to show their reluctance to accept cryptocurrencies and state that, “The first wave of crypto assets, of which Bitcoin is the best known, have so far failed to provide a reliable and attractive means of payment or store of value”. They also add,
“[Cryptocurrencies] were originally envisioned to address [financial] challenges. However, to date, they have suffered from a number of limitations, not least severe price volatility. Thus, [cryptocurrencies] have served as a highly speculative asset class for certain investors and those engaged in illicit activities, rather than as a means to make payments.”
However, it was recognized by the G7 that the conventional system of finance in many ways is ill-equipped to compete with the digital finance system. It also conceded that the “cross-border payments remain slow, expensive and opaque, especially for retail payments such as remittances.”
Numerous Blockchain Enterprises, Crypto Businesses, and commercial banks from around the world have already introduced cross-border remittance and payment solutions that outperform the current financial financial system both in terms of speed and transparency.
Continuing, the report says,
“Finance ministries, central banks, standard-setting bodies […] and international organizations should continue their efforts to promote faster, more reliable and less costly payment systems for both domestic and cross-border purposes, using new technology where appropriate, and in a globally consistent and coordinated manner.”
The authors of the report want the G7 nations to create “road maps” that are focused on “improving the efficiency and lowering the cost of payments and financial services.”
It is advised that the “road maps” include plans for digital fiat and the following:
- Support for initiatives that help improve the cross-border payments; standardization and legislative reforms for “emerging payment products and services” and facilitate useful and responsible innovation.
- Promotion of financial inclusion by review and update of call for action and boost support programs for the underdeveloped countries.
- Improve coordination between both the domestic and international authorities including harmonized standards and regulatory cooperation.
Some experts have told a leading Crypto news platform that this response by the financial authorities to cryptos and blockchain technology has been akin to “watching the taxi industry responding to Uber.” And “If people want to use these tokens, there is little governments can do to stop this. It would be like trying to ban the internet.”
On a serious note, it is still unclear if and how much the improved financial system will be decentralized. This is the main USP of the cryptocurrencies right now.
Iqbal V. Gandham, the MD of eToro UL also told the news platform in a statement, “Cryptoassets like Bitcoin are not about the digitalization of money,” says Iqbal Gandham. “The whole reason Bitcoin was created was its ability to bypass financial institutions, like banks, and issuing authorities, like governments, in a bid to create a currency that was borderless and decentralized,”
In the past decade since the introduction of Bitcoin, the cryptocurrencies had seen mixed reactions from the market. However, in the past few years, some countries have started recognizing its potential and have introduced regulations for legalizing cryptos as a means of payment. Major Giants like IBM, Microsoft, Tata Motors, Burger King, etc. have already recognized the potential offered by blockchain and cryptocurrency. And countries like Germany, Singapore, also are starting to accept it as a better means than fiat for payments.