Japan intends to make central bank digital currencies (CBDC) and cross-border regulation of cryptocurrencies a key theme in this year’s G7 meetings under its presidency, according to Masato Kanda.
Kanda is a top Japanese currency diplomat currently serving as the Vice Finance Minister of International Affairs. He made the comments during a seminar at the Peterson Institute for International Economics (PIIE) in Washington.
CBDCs
Kanda said that the G7 member states would make it a priority to help developing countries establish their own CBDCs and join the digitalization race.
He added that the main concern is ensuring that the countries meet the common standards developed by G7 central banks for retail CBDCs. Kanda said:
“We have to address risks from the development of CBDC by ensuring factors such as appropriate transparency and sound governance.”
Kanda said that despite the various benefits of digitalization, it is important to ensure that these new systems do not compromise the stability of the overall financial system of the world.
Crypto regulation
Kanda said that cryptocurrencies have enabled cross-border payments at an unprecedented level, with more people able to access the financial system than ever before. However, he added that crypto also brings with it myriad risks that need to be addressed via regulation.
G7 member states all agree that stronger regulation of crypto across borders has become a necessity following the high-profile collapses and bankruptcies in the crypto industry in 2022 like FTX — which was a “serious wake-up call,” according to Kanda.
“For crypto assets, there are a bit of diverging views among countries. But consensus is definitely that we need more regulation, particularly after the FTX shock.”
Kanda said there is an acute need for harmonized rules for crypto across borders and added that the Financial Stability Board is the best regulatory body to tackle this issue.
Japan G7 Presidency
Japan will chair the G7 meetings this year and Kanda’s statements point to a future of widespread digital money, both in the form of CBDCs and crypto.
Japan is arguably one of the most progressive countries in terms of regulating the crypto industry and has leaned into its pro-crypto stance in recent months. The ruling party recently published a “white paper” with recommendations on how to boost the crypto industry in the country.
However, it is unclear whether Japan’s approach toward crypto will be mimicked by other G7 states. Regardless, the focus on CBDCs and crypto will ultimately push adoption as more people become familiarized with digital assets.
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