Large economies seem to be about to tighten their grip on money. The largest G7 advanced economies have instructed their members to compete with cryptocurrencies and stablecoins , improving the existing financial system and considering the possibility of issuing digital fiat.
In the detailed report of the G7 stablecoins Working Group, it is recommended that “central banks, individually and collectively, evaluate the relevance of issuing digital currencies controlled by themselves, taking into account the costs and benefits in the respective jurisdictions”.
The report is entitled “Research on the impact of global stablecoins,” concluding that globally successful stablecoins can “create problems and risks” for:
- Monetary policy
- Financial stability
- International monetary system
- Fair competition
The authors of the document do not demonstrate a special love for cryptocurrencies, stating that "the first wave of crypto assets, of which bitcoin can be considered the most famous, still has not been able to provide a reliable and attractive means of payment or preservation of value":
“Initially, cryptocurrencies were intended to solve financial problems. However, today they suffer from a number of restrictions, not least from serious price volatility.
Thus, they acted as a highly speculative asset class for investors and for those involved in illegal activities, and by no means as a means of making payments. ”
At the same time, the G7 probably recognizes that traditional finance is outdated to compete with digital finance, and "cross-border payments remain slow, expensive and opaque, especially for retail payments, including money transfers."
A large number of blockchain companies, commercial banks and cryptocurrency organizations from around the world have already begun to implement cross-border solutions for money transfers and payments, which are superior to conventional finance both in speed and in transparency.
“Ministries of finance, central banks, standard-setting bodies, and international organizations should continue to promote faster, more reliable, and less costly payment systems for both domestic and international purposes, using new technologies.”
Ideally, G7 countries should create “roadmaps” aimed at “improving efficiency and reducing the cost of payments and financial services”, which will include:
- Supporting initiatives that improve cross-border payments, standardization, and legislative reform for “new payment products and services” and promote useful and responsible innovation;
- Promoting financial accessibility by reviewing and updating support programs for less developed countries;
- Improving coordination between authorities both domestically and internationally, including cooperation in the field of regulation and harmonization of standards.
Experts agree that the answers of the financial authorities to the development of cryptocurrencies and blockchains are similar to how the “taxi industry reacts to Uber”. If people want to use these tokens, governments can hardly prevent them. It's like trying to ban the internet. ”
An interesting fact is how decentralized an improved financial system can become, while decentralization is one of the main reasons for buying real cryptocurrencies.
Publication date 10/20/2019
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