G7 Finance Leaders Highlight CBDC Guidelines
- The finance officials endorsed key principles for retail central bank digital currencies.
Central banks around the world have increased their efforts significantly in the last few months for the development and issuance of central bank digital currencies (CBDC). Yesterday, finance officials from the world’s seven advanced economies highlighted some important guidelines for CBDCs.
According to a recent report published by Reuters, G7 finance leaders praised the recent innovation in digital money and Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term but also highlighted few regulatory and public policy issues. The officials outlined the need for a coordinated effort to reduce the risks associated with a CBDC.
"Any CBDC must support and do no harm to the ability of central banks to fulfill their mandates for monetary and financial stability. We reaffirm that any CBDC should be grounded in our long-standing public commitments to transparency, the rule of law and sound economic governance,” G7 finance leaders said in a recent statement.
Earlier this year, the Reserve Bank of India announced that the central bank is planning to launch CBDC trials by the end of 2021. Additionally, the European Central Bank (ECB), recently launched the investigation phase of the Digital Euro project.
CBDC Criticism
Despite the recent adoption by global central banks, the concept of CBDC received criticism from the crypto community due to its centralized nature. Earlier this week, Edward Snowden, a former NSA employee, called CBDC a ‘perversion’ of cryptocurrency.
“A CBDC is a perversion of cryptocurrency, or at least the founding principles and protocols of it—a crypto-fascist currency, expressly designed to deny you the basic ownership of your money by installing the State at the center of every transaction,” Snowden said.
Central banks around the world have increased their efforts significantly in the last few months for the development and issuance of central bank digital currencies (CBDC). Yesterday, finance officials from the world’s seven advanced economies highlighted some important guidelines for CBDCs.
According to a recent report published by Reuters, G7 finance leaders praised the recent innovation in digital money and Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term but also highlighted few regulatory and public policy issues. The officials outlined the need for a coordinated effort to reduce the risks associated with a CBDC.
"Any CBDC must support and do no harm to the ability of central banks to fulfill their mandates for monetary and financial stability. We reaffirm that any CBDC should be grounded in our long-standing public commitments to transparency, the rule of law and sound economic governance,” G7 finance leaders said in a recent statement.
Earlier this year, the Reserve Bank of India announced that the central bank is planning to launch CBDC trials by the end of 2021. Additionally, the European Central Bank (ECB), recently launched the investigation phase of the Digital Euro project.
CBDC Criticism
Despite the recent adoption by global central banks, the concept of CBDC received criticism from the crypto community due to its centralized nature. Earlier this week, Edward Snowden, a former NSA employee, called CBDC a ‘perversion’ of cryptocurrency.
“A CBDC is a perversion of cryptocurrency, or at least the founding principles and protocols of it—a crypto-fascist currency, expressly designed to deny you the basic ownership of your money by installing the State at the center of every transaction,” Snowden said.