A senior Bank of Japan (BOJ) official has warned the G7 nations that a common framework for regulating digital currencies should be established as quickly as possible.
G7 refers to the Group of Seven, an intergovernmental political forum made up of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
The statement comes in response to the ongoing conflict between Russia and Ukraine, as cryptocurrencies and their potential applications to circumvent economic sanctions come under increasing scrutiny.
the boss of the BOXWOOD payment systems department, Kazushige Kamiyama, said Reuters that the use of stablecoins makes it very easy to “create an individual global settlement system”, which in turn would make it easier for nation states to evade more traditional and regulated payment systems that use the US dollar, the euro or the yen for settlement.
Kamiyama added that a sense of urgency is paramount if the G7 nations are to coordinate effectively to regulate cryptocurrencies and digital assets, as current regulations do not fully account for their growing adoption and proliferation around the world.
Kamiyama added that this regulatory framework would affect the process of designing Japan’s central bank’s own digital currency (CBDC) — the digital yen. Individual privacy would need to be carefully balanced against concerns about money laundering and other white-collar crime.
BOJ Governor Haruhiko Kuroda Announced at Japan’s fintech FIN/SUM summit on March 29 that it has no plans to introduce a CBDC any time soon. Kuroda explained that the BOJ plans to carefully consider the expected roles of central bank money in the lives of Japanese citizens.
“We consider it important to thoroughly prepare ourselves to respond to the changes in circumstances in an appropriate manner, from the point of view of guaranteeing the stability and efficiency of the general payment and settlement systems.”
Kuroda’s comments come just four days after the BOJ. Announced which is moving into phase two of testing the viability of a Japanese CBDC. Phase two is scheduled to start this month, so whatever new regulation the G7 decides on will have some impact on this process.
Kuroda said a decision on whether to issue CBDC in Japan will most likely be made sometime in 2026, depending on the speed at which CBDC adoption occurs in the rest of the world.