WEF forms first global consortium for digital currency governance

PTI, Jan 25, 2020, 4:29 PM IST

Davos: The World Economic Forum on Friday announced the first global consortium focused on designing a framework for the governance of digital currencies, including stablecoins.

The Global Consortium for Digital Currency Governance will aim to increase access to the financial system through innovative policy solutions that are inclusive and interoperable.

The opportunities for financial inclusion will only be unlocked if the space is regulated properly and includes public-private cooperation across developed and high growth markets, the WEF said while announcing the new initiative on the last day of its 50th annual meeting after extensive consultation with the global community.

Digital currencies are often cited as a tool for financial inclusion, but this opportunity can only be realized when paired with good governance.

This is the first initiative to bring together leading companies, financial institutions, government representatives, technical experts, academics, international organizations, NGOs and members of the Forum’s communities on a global level, it said.

To tackle the challenge ahead, an international, multi-stakeholder approach with the public and private sectors working alongside civil society is needed.

This consortium will focus on solutions for a fragmented regulatory system. Efficiency, speed, interoperability, inclusivity and transparency will be at the heart of this initiative.

It will call for innovative regulatory approaches to achieve these goals and build trust. A set of guiding principles will be co-designed to support public and private actors exploring the opportunities that digital currencies present.

“Digital currency, a cross-cutting topic that requires input across sectors, functions, and geographies, is a key area of interest for the Forum,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

Lesetja Kganyago, Governor of the South African Reserve Bank said any evaluation of digital currencies should consider both policy and business objectives, as well as the unique circumstances that face different economies around the world, in order to fully evaluate their risks and benefits.

Governance is the core pillar of any form of digital currency, said Mark Carney, Governor of the Bank of England. “It is critical that any framework on digital currencies ensures security, efficiency and legitimacy of payments while ensuring fair and open competition.”

Properly regulated digital currency can be used for cheaper and faster cross-border payments, financial inclusion, and rooting out illicit finance, said Tharman Shanmugaratnam, Senior Minister and Chairman, Monetary Authority of Singapore.

We are watching closely as digital currencies increasingly become an area of focus around the world,” said Eric Parrado, Chief Economist, Inter-American Development Bank.

The release of digital currencies has far-reaching implications, from domestic financial stability to international trade, said Rania Al-Mashat, Minister of International Cooperation, Egypt.

Building on our collaboration around the World Economic Forum’s Central Bank Digital Currency Toolkit, we are eager to continue exploring the pillars of well-informed approaches to digital currency through this consortium, said Rasheed Al Maraj, Governor of the Central Bank of Bahrain.

This initiative builds on work done by the Forum over the past year, convening a global community of central banks to co-design a policy framework for the adoption of digital currencies.