G7 Going to War Over Control of Money, Says ‘Bitcoin Failed’

Cryptocurrency Regulation Stablecoin

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:54 EDT

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It seems that the major economies are about to intensify the war for control over money.

The Group of Seven (G7) largest advanced economies has instructed its members to compete with cryptocurrencies and stablecoins by improving the existing financial system – and consider issuing digital fiats.

In a detailed report from the G7 Working Group on Stablecoins, the body recommends that “central banks, individually and collectively, will assess the relevance of issuing central bank-controlled digital currencies in view of the costs and benefits in their respective jurisdictions.”

The report is entitled “Investigating the impact of global stablecoins,” and concludes that globally successful stablecoins could “pose challenges and risks” to:

• Monetary policy
• Financial stability
• The international monetary system
• Fair competition

The authors do not show much love for cryptocurrencies, either, stating, that “The first wave of cryptoassets, of which Bitcoin is the best known, have so far failed to provide a reliable and attractive means of payment or store of value”:

“[Cryptocurrencies] were originally envisioned to address [financial] challenges. However, to date, they have suffered from a number of limitations, not least severe price volatility. Thus, [cryptocurrencies] have served as a highly speculative asset class for certain investors and those engaged in illicit activities, rather than as a means to make payments.”

However, the G7 appears to recognize that conventional finance is, in many ways, hopelessly ill-equipped to compete with digital finance, and concedes that “cross-border payments remain slow, expensive and opaque, especially for retail payments such as remittances.”

A large number of blockchain enterprises, commercial banks and cryptocurrency businesses from around the world have already begun introducing cross-border remittance and payments solutions that outperform conventional finance in both speed and transparency.

The report continues,

“Finance ministries, central banks, standard-setting bodies […] and international organizations should continue their efforts to promote faster, more reliable and less costly payment systems for both domestic and cross-border purposes, using new technology where appropriate, and in a globally consistent and coordinated manner.”

The authors say they want G7 nations to create “road maps” that focus on “improving the efficiency and lowering the cost of payments and financial services.”

The “road maps” in question could include digital fiat plans, as well as:

• Providing support for initiatives that improve cross-border payments, standardization and legislative reform for “emerging payment products and services” and facilitating useful and responsible innovation
• Promoting financial inclusion by reviewing and updating calls for action and boosting support programs for less developed countries.
• Improving coordination between authorities, both domestically and internationally, including regulatory cooperation and harmonized standards.

Learn more: Central Banks Realize They Can’t Ignore Crypto, Digital Fiats Any More

Experts have recently told Cryptonews.com that financial authorities’ responses to crypto and blockchain developments thus far have been akin to “watching the taxi industry responding to Uber.” And “If people want to use these tokens, there is little governments can do to stop this. It would be like trying to ban the internet.”

More fatally, it’s still unclear how decentralized the improved financial system might be, which stands as one of the main selling points of true cryptocurrencies.

“Cryptoassets like Bitcoin are not about the digitalization of money,” says Iqbal Gandham. “The whole reason Bitcoin was created was its ability to bypass financial institutions, like banks, and issuing authorities, like governments, in a bid to create a currency that was borderless and decentralized,” Iqbal V. Gandham, the managing director at eToro UK, recently told Cryptonews.com.