G-7 calls for proper regulation over digital payment services

Oct 14 , 2020. 10 hours ago – 00:12 KYODO NEWS

Photo taken on May 24, 2016, shows flags of Group of Seven industrialized countries. (Kyodo)

TOKYO – Finance chiefs of the Group of Seven industrialized nations said Tuesday that digital payment services must be “appropriately supervised and regulated,” raising concern as both public authorities and companies are studying the issuance of digital currencies.

The warning comes as China’s central bank has started trial payments using digital yuan in part of the country, a move that could mount a challenge to the international currency system based on the U.S. dollar, while Facebook Inc. has proposed its Libra stablecoin.

In a joint statement released after their video conference, the G-7 finance ministers and central bank governors acknowledged that digital payments could help improve access to financial services and reduce costs. But they also emphasized the necessity of making efforts to prevent fraudulent activities such as money laundering.

They maintained that “no global stablecoin project should begin operation until it adequately addresses relevant legal, regulatory, and oversight requirements.”

A range of questions have been raised as to digital currencies. They could be used for money laundering, while some are concerned about the issuer exclusively obtaining an enormous amount of information on individuals, including purchasing history.

The G-7 pledged to support work to “analyze the risks” concerning such payments and take “appropriate policy responses.”

The online meeting was held as the U.S., European and Japanese central banks are studying the possibility of issuing digital currencies.

But no central banks in the G-7 economies — Britain, Canada, France, Germany, Italy, Japan and the United States — or in the European Union have so far decided to issue digital currencies.

Central bank digital currencies could provide settlements at any place at a lower cost than digital settlements offered by private companies, which charge commissions from retailers and are not necessarily available at all shops.

On Tuesday, the finance chiefs also expressed concern about the rising threat of ransomware attacks amid the coronavirus pandemic.

The attacks often involve cryptocurrency payments, and the G-7 vowed to “combat this threat collectively as well as individually.”

From Japan, Finance Minister Taro Aso and Bank of Japan Governor Haruhiko Kuroda joined the conference.