Japanese news outlet Kyodo reports that the G7 meetings later this year will include discussions about central bank digital currency (CBDC) to share knowledge. It claims the Japanese government made the suggestion and the United States responded positively. The Bank of Japan formally set up a digital currency working group just last week.
The report claims the topic is in response to China’s lead in CBDC research with its digital yuan already starting trials. And it’s a potential challenge to the U.S. dollar’s dominance. Following the June 2019 announcement of Facebook’s Libra, the G7 rapidly set up a working group on stablecoins and published a report just four months later.
If one looks at G7 members, most are already involved in CBDC research at some level. The UK, Canada and Japan have spent several years researching, and each published multiple major reports on the topic. France has recently started tests and, together with fellow G7 member Germany, is involved in the Bank for International Settlements (BIS) Innovation Hub for Europe, which explores CBDC. More recently, the U.S. Federal Reserve has said it’s monitoring CBDC developments. The only G7 member not involved in CBDC research is Italy, although it recently expressed an interest.
Additionally, six countries have already agreed to collaborate on CBDC research, including Canada, England, Japan and Europe, which of course is not yet one country. So the only missing G7 member is the U.S. and it is collaborating in the BIS Innovation Hub headed by Benoît Coeuré, who leads the G7 working group on stablecoins. So the news makes a lot of sense.
However, the G7 summit has been converted from a U.S. Camp David gathering to a virtual conference and postponed without a specific date but possibly September. Furthermore, President Trump has suggested adding other members, including former G8 participant Russia as well as Australia, South Korea and India.