Group of Seven

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Group of Seven
Founded 1975
Headquarters Varied

The Group of Seven (G7) is an international group of seven of the largest industrialized democracies in the world created in 1975 to discuss global economic governance, security and energy policy. The members are the U.S., the U.K., Canada, Japan, France, Germany, and Italy. Typically, the heads of the G7 countries meet once a year in a ministerial meeting hosted by each country once every seven years. Finance and foreign ministers also attend their own annual meeting.

Russia joined the group in 1994 and it became known as the Group of Eight (G8) until 2014, when Russia was suspended following its annexation of Crimea.[1]

History[edit]

In 1975 the French president Valery Giscard d’Estaing initiated the first meeting of what would become the G7 at Château de Rambouillet - a commune in the metropolitan area of Paris. Leaders from six countries attended, including France, forming the Group of Six 9G6). Canada joined a year later, causing it to become the Group of Seven.

Since 1977 the leader of the European Commission has also been invited to the summits. Initially, the G7 primarily discussed macroeconomic issues and global development trends, but current political issues were later added to the agenda.[2]

In 1994, at a summit in Naples, Russia was added to the Group of Seven (G7) countries, effectively forming the Group of Eight (G8).[3]

Russia was suspended from the G8 in 2014 following the nation's illegal annexation of the Crimea region of Ukraine, and the group went back to being called the G7.[4] Three years later, in 2017, Russia announced that it would be permanently stepping away from the group. A spokesperson from the Kremlin, Dmitry Peskov, said that Russian sovereign Vladimir Putin's new priority was G20, a group of countries that includes Brazil, Mexico, Turkey, and Saudi Arabia.[5]

Cryptocurrency[edit]

In 2019, Facebook announced the development of Diem, a stablecoin first named Libra that is designed to improve the process of executing peer-2-peer transactions across national borders. On June 18, 2019, G7 announced it would set up a high-level forum to examine the risks of such digital assets to the financial system, and how to ensure regulatory measures like preventing money-laundering. In response to the news that the social media company planned on backing Libra with hard assets like currencies and securities, Mark Carney, governor of the Bank of England, said that Libra (Diem) would be considered "with an open mind" but not "an open door."[6] Days later, French central bank governor Francois Villeroy de Galhau said that G7 will create a taskforce to study stablecoins in order to learn how best to regulate them. According to Reuters, another issue to be studied by the taskforce is custodianship of digital assets.[7]

In October 2019, the G7 and the Bank for International Settlements (BIS) released a report on their findings. The report said that stablecoins built for proprietary financial systems like Diem “pose challenges for competition and antitrust policies” and should not be launched until all legal and regulatory risks are addressed. It also said that the creation of a global stablecoin could “lead to significant market concentration” due to “the strong network effects that initially spurred their adoption, the large fixed costs needed to establish operations at scale and the exponential benefits of access to data.”[8]

According to press reports, the group of nations was preparing to make a similar statement regarding Libra (Diem) in October 2020. The press reports noted that that the European Central Bank, which serves Germany, France and Italy, Canada and the U.K. have all embarked on their own stablecoin projects that ostensibly would compete with Libra (Diem).[9]

References[edit]