This week, the G7 is expected to discuss crypto regulation, among other global issues.
Crypto regulation becomes of interest to the G7
This was revealed by Reuters citing statements made by the President of the French Central Bank, Francois Villeroy de Galhau.
Villeroy said that cryptocurrency regulation is likely to be discussed at the meeting of Group of Seven financial chiefs being held this week in Germany,
During a conference on emerging markets in Paris, he said, referring to the recent turmoil in the cryptocurrency markets:
“What happened in the recent past is a wake-up call for the urgent need for global regulation”.
He was evidently referring to the collapse of UST and LUNA, and in particular to the fact that a stablecoin pegged to a fiat currency can lose its value so quickly and unexpectedly, causing huge losses to its holders.
He then added:
“Europe paved the way with MICA (regulatory framework for crypto-assets), we will probably … discuss these issues among many others at the G7 meeting in Germany this week”.
The program of the G7 meeting in Germany
The G7 meeting of finance ministers and central bankers, called the “G7 Finance Track”, starts today and will end on Friday 20. It is being held in Bonn and Königswinter.
The proceedings will be led by German Finance Minister Christian Lindner, and Deutsche Bundesbank President Joachim Nagel. They will cover current issues and challenges in the area of financial policy.
In particular, Germany has made sustainable economic recovery from the effects of the pandemic, strengthening the financial stability and resilience of national economies to cope with future crises, and the upcoming transformation processes in the context of digitization and climate neutrality among its priorities.
In addition to these priorities, issues related to the trade policy of the International Monetary Fund (IMF) and the multilateral activities of development banks and their governance will also be addressed.
Certainly, the discussion on possible crypto regulation concerns both financial stability and digitization, and will probably also be part of the discussions on climate neutrality.
The countries belonging to the Group of Seven (G7) are the United States of America, Canada, Japan, Germany, the United Kingdom, France and Italy.
The MiCA (Markets in Crypto-Assets) mentioned by Villeroy, on the other hand, is the European Union’s new regulatory proposal specifically dedicated to crypto assets.
In light of what happened last week, it is possible that this proposal may also undergo changes in the future, especially if new issues emerge from the G7 Finance Track that have not been sufficiently addressed in the past.
Stablecoins in particular are considered to be a problem that may require specific regulation in this regard, even though they do not appear to be capable of creating structural problems that could seriously undermine global financial stability. It is enough to note that the implosion of UST, which burnt about $17 billion in a few days, does not seem to have generated any real impact on traditional financial markets.