On May 20, the leaders of a group of seven (G7) countries released a report on global challenges currently world and their countermeasures. During the G7 Hiroshima Communique, group leaders discussed the Charter of the United Nations (UN) and international partnership.
According to a report, the G7 summit held 19-21 May in Hiroshima, Japan sheds light on various emerging challenges like the support of Ukraine against Russia’s illegal encroachment. Also, it discussed the development in the financial sector globally. In the era where new payment systems are emerging and taking the place of traditional systems, it is very important to effectively manage the volatility. The G7 leaders concluded that the group will take appropriate actions to maintain financial stability and strengthen resilience in the global financial system. “We reaffirm that our financial system is resilient, supported by the financial regulatory reforms implemented after the 2008 global financial crisis”, says the G7 Communique.
In the statement, the G7 leaders informed about the enhancement of the workability of the Financial Stability Board (FSB) and standard-setting bodies on improving non-bank Financial intermediation. Additionally, it emphasized harnessing the potential benefits of digital money. According to G7, digital money can be used as an efficient payment system that will provide payment efficiency and financial inclusion. Some potential risks are also associated with digital money like its efficiency, resilience towards volatility, and integrity of the financial system.
Crypto as an alternative payment system is prevalent in the global financial system because of its cost-effectiveness and easier cross-border transactions. By keeping the widespread chaos regarding the regulation of cryptocurrencies, the G7 Summit Communique discussed crypto management. According to the report, to address the threats to financial stability and integrity posed by crypto-asset markets and activities. Also, to prevent regulatory arbitrage, and foster responsible innovation, effective monitoring, regulation, and oversight are essential.
At the G7 Summit, the president of the United States, Joe Biden showed his discontent towards crypto and said, “I’m not going to agree to a deal that protects wealthy tax cheats and crypto traders while putting food assistants at risk”. For those who are not aware, Joe Biden has remained very strict towards the crypto regulation. In March, the planned budget of the Biden administration was anticipated to significantly alter the nation’s budgetary policy. The proposed provision to close tax loopholes on crypto transactions is just one part of this broader effort. It will be interesting to see the upcoming developments from the international forums in crypto management.