Abstract : The G20 finance ministers meeting was held on the 9th of this month. In the statement released after the meeting, the technological innovation of cryptocurrency was positively commented.
Yesterday afternoon, Chinese President Xi Jinping was invited by Japanese Prime Minister Shinzo Abe to participate in the G20 summit in Osaka, Japan. Japan Economic News Network commented that the purpose that Shinzo Abe actively appealed to heads of different countries to participate in this summit, was majorly because he realized that the global digital economy may be greatly hindered.
There are three key points in the agenda of this morning (28th): First, the discussion about the world economy and trade status; Second, WTO reform issue; Third, the AI development and usage principle.
French President Emmanuel Macron arrived in Japan in advance, and urged everyone to "face globalization, digitization and climate change" in the Science Future Museum of Japan and proposed that rules in the AI field must be formulated and put on the agenda at this summit. He believes that it is necessary to establish a formal management organization - the Intergovernmental Panel of Artificial Intelligence (IPAI), to conduct an ethical review of the technical development and use of AI.
The topic of the afternoon is about digital issue - "WTO’s measures about the formulation of rules in the digital domain". The global financial system and business that everyone is concerned about will be the main discussion issues in the afternoon. Among the issues discussed, cryptocurrency and blockchain technology issues are highly anticipated.
However, with Facebook's Libra project gaining more and more attention, it undoubtedly becomes one of the topics in the summit. Yesterday, the head of the Financial Stability Board (FSB) sent a letter to the summit and expressed his position:
“If (digital currency) is widely used in retail applications, we hope the authorities to pay close attention to and follow the regulation principles with high standards.”
On the 25th, the Financial Conduct Authority (FCA) also said that the UK Treasury and the Bank of England were cooperating to review Facebook's plans. “We have to be in close contact with Facebook and Libra both domestically and internationally, otherwise we cannot recognize (the project)”.
On the 23rd, the Bank for International Settlements (BIS) issued a statement, which set off the alarm bells for all kinds of large IT (information technology) companies, because their provision of financial services will lead to "new challenges". According to the statement: IT companies are gaining progress in payment and financing based on rich data, but its wide range of users may bring "a rapid change in the financial world".
Meng Wenneng, director of the Monetary Authority Singapore(MAS), who performs the central bank's functions, said that he had discussed with Facebook that Facebook's newly issued stable currency Libra, Libra’s management association, the Facebook subsidiary Calibra, which will launch digital wallet for Libra, as well as cooperative partners of Libra would take this opportunity and study the project Libra “very carefully”.
MAS found that there were significant obstacles in this project. Meng Wenneng said at a press conference that Libra may bring some benefits, such as the possibility of providing a low-cost payment system to help people who do not have access to banking services to enter the mainstream financial system, but he showed some concerns which were “not trivial” for how Libra would function.
Libra has Facebook’s 2.7 billion potential customers globally and is expected to be used for cross-border remittances and online payments. Therefore, from the perspective of anti-money laundering and consumer protection, it is necessary to make changes to existing financial institutions and rules.
Pre-heating of cryptocurrency issues by major international organizations
The G20 finance ministers meeting was held on the 9th of this month. In the statement released after the meeting, the technological innovation of cryptocurrency was positively commented. The statement mentioned that technological innovation including cryptocurrency can bring great benefits for financial system and wider economy. The Financial Stability Board (FSB), commissioned by the G20, will regularly evaluate the impact of the cryptocurrency on financial system. At present, the participating countries have reached a consensus that cryptocurrency does not pose a threat to the stability of the global financial system, with no one raising any objections.
The Japan Financial Services Agency participated in the preparation process of the report of the International Organization of Securities Commissions (IOSCO). The Finance Minister stated, "We recognize IOSCO’s report on cryptocurrency trading platform about protecting consumers and investors and maintaining the safety of market.” Although countries currently have different attitudes toward cryptocurrencies, there is a view that if you want to limit cryptocurrencies in the future, the report of IOSCO will become the “entry guide”.
After this meeting, the price of Bitcoin was greatly affected. The price of Bitcoin raised from less than 8,000 US dollars on the 9th to about 13,000 US dollars now.
However, at the G20 finance ministers meeting, there was no new content on anti-money laundering measures. Everyone focused on the FATF(Financial Action Task Force on Money Laundering) meeting. On June 21st, the international intergovernmental organization FATF adopted the “Guidelines for Risk-Based Virtual Assets and Virtual Asset Service Providers” in a routine plenary meeting, and proposed AML/CFT (anti-money laundering/anti-terrorism financing) regulatory requirements to organizations that were relevant to transactions involving cryptocurrency exchanges, custodians, and money funds. The new regulations require that the relevant service providers need to attach corresponding customer information to each other when transferring money to form a flow chart of assets, so that the regulators can track them.
According to the “Decentralized Financial Technology: Report on Financial Stability, Regulation and Governance Impact” issued by the Financial Stability Association (FSA) on June 6 this year, the advantages and risks of the stability of the existing financial system were interpreted. FSA stated that tokenlization is becoming a standardized mechanism that is particularly applicable to non-current assets through access to traditional asset ownership in the public and private chains. The report also affirmed the practical application of blockchain technology in smart contracts.