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- Central banks' digital currencies must support and "do no harm" to their monetary mission, G7 finance leaders said.
- If issued, CBDCs would coexist with cash and must contribute to a secure financial ecosystem, they said Wednesday.
- These currencies should meet rigorous standards of privacy and be energy-efficient, they added.
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Central bank digital currencies must support and "do no harm" to a bank's ability to implement their mission for monetary and financial stability, and would complement cash if issued, Group of Seven financial leaders said Wednesday.
"If issued, a CBDC would complement cash and could act as a liquid, safe settlement asset and as an anchor for the payments system," they said in a statement on guidance issued after a meeting in Washington.
Such a move would have to be aligned with rigorous privacy standards, accountability on data protection for users, and transparency on the use and storage of information in order to instill user trust. Under the guidelines, CBDCs would also have to be energy-efficient.
"Any CBDC ecosystem must be secure and resilient to cyber, fraud and other operational risks, must address illicit finance concerns, and be energy efficient," the finance ministers and central bank governors said.
The prospect of digital money from central banks is one of the hottest topics in the financial community. The debate over the implementation of CBDCs has been clouded by disagreements between central banks and assertive backing by cryptocurrency proponents.
Bank of America has said the adoption of CBDCs is "inevitable" because of the diminishing role of physical currency.
The G7 group acknowledged that CBDCs could improve cross-border payments, which often face challenges such as high costs and low speed. But they noted nations have a "shared responsibility to minimize harmful spillovers to the international monetary and financial system."
Their guidance endorsed 13 public policy principles for retail CBDCs, which highlight the need for coexistence with existing means of payment and transparency in their operation.
Leaders also touched on stablecoins - assets pegged to a stable currency such as the US dollar - saying they need to be held to high regulatory standards.
"A stablecoin widely used as a store of value or means of payment would pose significant risks to financial stability without appropriate regulation," they said.
Settlement assets need to have stable value to be adopted widely as payments, the G7 said. But the highly volatile nature of unbacked crypto assets means they are unable to fulfil this function, they added.
No G7 authority has so far taken the decision to issue a CBDC, the group noted, saying they will continue to carefully consider potential policy implications.
China has taken the lead by being the only major economy to release a national rollout of its own CBDC in June.
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