drawn up in the G7. We report the basic text of the 13 principles. We attach the original text of 27 pages.
Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs)
The UK presidency of the G7 comes at a pivotal time for the future of money and payments, with rapid innovation offering new opportunities and public policy considerations.Central Bank Digital Currencies (Cbdcs), a potential digital form of money that could be used alongside physical banknotes and coins, are part of this broader history of digital innovation. CBDCS could offer businesses and consumers new ways to pay in the future and could support inclusion and innovation in an increasingly digital and dynamic economy. But they also raise important questions about the reshaping of our economy, financial systems, and how people interact with money and payments. No G7 authority has yet decided whether it will issue a CBDC and this is a sovereign issue for each jurisdiction. This report, Public Policy Principles for Retail Cbdcs, defines a common set of considerations on the public policy implications of CBDC, which reflect the shared and enduring values of the G7 in transparency, rule of law and sound economic governance. These public policy principles for retail CBs should support and inform policy decisions as we respond to a new wave of innovation in money and payments; and will be useful to jurisdictions and international organizations considering CBDC, in the G7 and beyond. Rt Hon Rishi Sunak MP Chancellor of the Exchequer Andrew Bailey Governor of the Bank of England
Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs)
Introduction
Money and payments are critical to our societies and economies. Innovation is quick to reshape national and international financial infrastructures, with new forms of emerging public money. Safe and efficient transactions are essential to sustain a thriving economy, ensure monetary and financial stability and safeguard confidence in the financial system. The rapid growth in the use of digital payments is transforming the way people and businesses impacts are now far-reaching, with implications for broader public policy goals. These Trends have been further accelerated by the Covid-19 pandemic. Taking advantage of the opportunities and addressing the risks of these developments is a priority. In G7 central banks and ministries of finance are exploring how digital innovation can maintain access to and promote the usefulness of central bank money in the form of retail currency Banking Digital Currencies (CBDCs). A retail CBDC would be a digital form of central bank money, denominated in the national unit of account, distinct from electronic reserves (which are not currently accessible by individuals) and physical money. As a direct responsibility of the central bank Cbdcs would also be distinct from commercial bank money. If issued, CBDCS, as a form of central banking money, could act both as a liquid, secure settlement asset and as an anchor for the payments system. CBDCS are not cryptographic assets. Crypto assets are not issued by a central bank, can be highly volatile, and are not currently widely used for payments. CBDCS are fundamentally different from private digital currencies issued as stablecoins, which are the responsibility of private entities seeking to maintain the stability of their price (typically in relation to stable assets such as the Fiat currency). CBDC can be considered in two parts: the CBDC itself, a central bank-issued instrument that can be transferred as a means of payment or held as a store of value, and the broader ecosystem in which a CBDC operates, including infrastructure support that allows CBDC balances to be managed and payments made. This broader infrastructure could involve both public and private participants (such as banks, digital wallet providers or other payment entities).
In recent years, G7 central banks, together with Sveriges Riksbank and the Swiss National Bank, have worked collaboratively, including within a group chaired jointly by the International Bank for Settlements (BIS) and the Bank of England, to explore considerations related to retail CBDCs. Public policy principles for retail central bank digital currencies (CBDCs) Fundamental issues
Principle 1: Any CBDC should be designed in such a way as to support the fulfillment of public order does not hinder the central bank's ability to fulfill its mandate and does not cause any damage to monetary and financial stability
Principle 2: G7 values for the international monetary and financial system must guide the design and operation of any CBDC, i.e. respect for the rule of law, sound economic government management and adequate transparency.
Principle 3: Strict rules on privacy, responsibility for protecting user data and transparency on how information is protected and used is essential for CBDCs to command trust. The rule of law in every jurisdiction establishes and supports these considerations.
Principle 4: To obtain reliable, durable and adaptable digital payments; any CBDC ecosystem must be secure and resilient to cyber, fraud and other operational risks.
Principle 5: CBDCs should coexist with existing payment means and operate in an open, secure, resilient, transparent and competitive environment that promotes choice and diversity in payment options.
Principle 6: Any CBDC must carefully integrate the need to make payments faster, more accessible, secure and more convenient with a commitment to mitigate their use to facilitate crime.
Principle 7: CBDCs should be designed to avoid risks of harm to the international currency and financial system, including the monetary sovereignty and financial stability of other countries.
Principle 8: the energy use of any CBDC infrastructure should be as efficient as possible to support the common commitments of the international community for the transition to a 'net zero' economy.
Principle 8: the use of energy of any CBDC infrastructure should be as efficient as possible to support the common commitments of the international community for the transition towards a 'net zero' economy.
Principle 10: Authorities should consider the role of CBDCs in contributing to financial inclusion. The CBDC should not hinder and, where possible, improve access to payment services for those excluded or underserved by the existing financial system, integrating the important role that money will continue to play.
Principle 11: Any CBDC used to support payments between authorities and the public should do so quickly, economically, transparently, inclusive and securely, both in normal times and in times of crisis.
Principle 12: Jurisdictions considering issuing CBDCS should explore how they could improve cross-border payments, including through central banks and other organizations operating openly, and collaboratively consider the international dimensions of CBDC design.
Principle 13: Any CBDC used for the provision of international development assistance will safeguard the main public policies of the issuing and beneficiary countries, while providing transparency on the nature of the design features of the CBDC.
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