(CBDC)  drafted in the G7. We have the basic text of the 13 Principles. We enclose the original text of 27 pages.

Public Policy Principles for Retail Central Bank Digital Currencies

(CBDCs)

The UK’s Presidency of the G7 comes at a pivotal time for the future of money and payments, with rapid innovation bringing fresh opportunities and considerations for public policy.

Central Bank Digital Currencies (CBDCs), a potential digital form of money that could be used along side physical notes and coins, are part of this wider story of digital innovation. CBDCs might 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 the way in which people interact with money and payments.

No G7 authority has yet decided whether they will issue a CBDC and this is a sovereign matter for each jurisdiction. This report, Public Policy Principles for Retail CBDCs, sets out a common set of

considerations on the public policy implications of CBDC, reflecting the shared and enduring values of the G7 on transparency, the rule of law, and sound economic governance.

These Public Policy Principles for Retail CBDCs should support and inform policy deliberations 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

Page 3 of 27

Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs)

Introduction

Money and payments are fundamental to our societies and economies. Innovation is rapidly reshaping domestic and international financial infrastructure, with new forms of private and public money emerging. Safe and efficient transactions are critical to support a thriving economy, ensure monetary and financial stability, and safeguard trust in the financial system. The rapid rise in the use of digital payments is transforming the way people and businesses transact, and their

impacts are now wide-ranging, with implications for broader public policy objectives. These trends have been further accelerated by the Covid-19 pandemic.

Harnessing the opportunities and addressing the risks of these developments is a priority. In response, G7 central banks and finance ministries are exploring how digital innovation can maintain access to, and promote the utility of, central bank money in the form of retail Central Bank 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 cannot currently be accessed by individuals), and physical cash. As a direct liability of the central bank CBDCs would also be distinct from commercial bank money. If issued, CBDCs, as a form of central bank money, could act as both a liquid, safe settlement asset and as an anchor for the payments

system. CBDCs are not ‘cryptoassets’. Cryptoassets are not issued by a central bank, can be highly volatile, and are not currently widely used for payments. CBDCs are fundamentally different from privately

issued digital currencies such as stablecoins, which are a liability of private entities that seek to maintain stability in their price (typically in relation to stable assets such as fiat currency). CBDC can be considered in two parts: the CBDC itself, an instrument issued by the central bank that can be transferred as a means of payment or held as a store of value, and the wider ‘ecosystem’ in which a CBDC operates, including the supporting infrastructure that allows CBDC balances to be

managed and payments made. This wider 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 the Sveriges Riksbank and the Swiss National Bank, have worked collaboratively, including in a group jointly chaired by the Bank for International Settlements (BIS) and the Bank of England, to explore considerations related to retail CBDCs.

Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs)</strong>

Foundational Issues

Any CBDC should be designed such that it supports the fulfillment of public policy objectives, does not impede the central bank’s ability to fulfill its mandate and ‘does no harm’

to monetary and financial stability

G7 values for the International Monetary and Financial System should guide the design and operation of any CBDC, namely observance of the rule of law, sound economic governance and appropriate transparency

Rigorous standards of privacy, accountability for the protection of users’ data, and transparency on how information will be secured and used is essential for any CBDC to command

trust and confidence. The rule of law in each jurisdiction establishes and underpins such considerations.

To achieve trusted, durable, and adaptable digital payments; any CBDC ecosystem must be secure and resilient to cyber, fraud and other operational risks.

CBDCs should coexist with existing means of payment and should operate in an open, secure, resilient, transparent and competitive environment that promotes choice and diversity in payment options.

Any CBDC needs to carefully integrate the need for faster, more accessible, safer and cheaper payments with a commitment to mitigate their use in facilitating crime.

CBDCs should be designed to avoid risks of harm to the international monetary and financial system, including the monetary sovereignty and financial stability of other countries.

The energy usage of any CBDC infrastructure should be as efficient as possible to support the international community’s shared commitments to transition to a ‘net zero’ economy.

CBDCs should support and be a catalyst for responsible innovation in the digital  economy and ensure interoperability with existing and future payments solutions.

Authorities should consider the role of CBDCs in contributing to financial inclusion. CBDC should not impede, and where possible should enhance, access to payment services for those excluded from or underserved by the existing financial system, while also complementing the important role that will continue to be played by cash.

Any CBDC, where used to support payments between authorities and the public, should do so in a fast, inexpensive, transparent, inclusive and safe manner, both in normal times

and in times of crisis.

Jurisdictions considering issuing CBDCs should explore how they might enhance cross-border payments, including through central banks and other organizations working openly

and collaboratively to consider the international dimensions of CBDC design.

Any CBDC deployed for the provision of international development assistance should safeguard key public policies of the issuing and recipient countries, while providing sufficient transparency about the nature of the CBDC’s design features.

WE believe that all 13 fundamental principles are satisfied by our Real Digital Currency that we present on this site.

The digital currency at energy costs ZERO for you is a goal, for us is reality.