The finance ministers of the Group of Seven economies began their two-day meeting in London on Friday, June 4th.

This is the first face-to-face meeting after the G20 meeting in February 2020 in Saudi Arabia.

The most important things on the agenda were defining the rules for digital currencies issued by central banks and growing concerns about China’s accelerating development towards the digital yuan.

Over the past few months, China has been aggressively testing people’s use of its central bank digital currency with recent tests conducted in the capital, Beijing.

The G7 hopes to introduce the Chinese digital yuan into an international regulatory framework.

Besides, there is a growing concern that the Chinese government will keep all digital yuan transaction data to itself even while using a CBDC for global transactions.

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According to a report issued byNikki AsiaNot only would this violate data privacy, but it could also be used as a tool for political gain and suppression of liberties.

Digital Yuan Economic Zone:

Regardless of the domestic use of China’s “digital yuan” currency, there is a strong belief that the Chinese government will use the digital yuan to conduct transactions in the Belt and Road Initiative (BRI) across Asia and Europe.

There is strong concern among the G7 that this could lead to the emergence of a new economic zone centered around the countries participating in the Belt and Road Initiative.

Such an economic zone could also undermine the current currency system based on the US dollar.

Besides, the yuan-driven digital economic system can reduce the impact of Western sanctions.

As a result, the Group of Seven (G7) is calling for international laws governing CBDCs.

Last October 2020, the G7 finance ministers also called for such transparency.

Central banks of major economies are also involved in creating their own digital currencies.

The G7 has already defined some of the founding principles of a central bank digital currency.

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One of these principles is that a central bank should not harm monetary or financial stability by using central bank digital currencies.

The European Central Bank (ECB) recently raised concerns about the increased use of other digital currencies for cross-border payments and stressed the need for a central bank digital currency.

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