G7 Denied Cryptos As Means Of Payment, Stablecoins Might Be An Option

The Group of Seven (G7) published its final report on stablecoins, admitting that nowadays, remittance and settlement processes are slow and ineffective. G7 sees an opportunity for global stablecoin projects to fix some of the issues of modern banking, but also notes some of the challenges behind such a transition.

According to the G7 report, cryptocurrencies in their current state are highly volatile and have problems with scalability. Cryptos also have regulatory complications, apart from other issues. “Cryptocurrencies are used for high speculation market activity and illicit actions. They still cannot be taken into account as a means of payment”, the report states.

Stablecoins, despite their unclear international classification, “might be better prepared for widespread usage,” as a tool for storing value and payment. The G7 pointed out the critical difference between the two types of digital assets – a pool of other assets can back stablecoins. The G7, however, stated that no stablecoin project should operate before first following strict regulatory frameworks.

The main concern of the countries in the G7 – France, Japan, Canada, the U.S, the U.K, Italy, and Germany – is what problems could a global stablecoin project bring to monetary policies, financial stability, and fair competition. Combating money-laundering and terrorism financing through digital assets is also another big concern.

“The regulatory challenges must be adequately addressed for any stablecoin project, regardless of its size and importance. Regulations, however, must be clear and proportional”, the report states.

One of the most anticipated stablecoin projects to date – Libra, responded to the G7 report, stating that “the Libra association plans to work closely with regulatory bodies.” The stablecoin project, according to the Libra Association, “is designed to work under the existing regulatory frameworks and be fully compliant with them – without disrupts or undermining.”

The G7 also noted the importance of Central Bank Digital Currencies (CBDCs). The group stated that governments across the globe should develop plans for efficiency improvements and lowering the costs of their financial services.

“Governments must consider the use of CBDCs and their relevance to the current market situation,” the report concludes.