Accompanies an article on the World Economic Forum

WEF group wants to write the rules for digital currencies

Facebook’s Libra proposal forced central bankers to wake up to the need for a common set of rules governing stable coins and other cryptocurrencies

The World Economic Forum has established a global consortium focused on creating a framework for the governance of digital currencies, including government-backed stablecoins pegged to an underlying asset, such as the yen, euro or the U.S. dollar. 

The WEF announced its Consortium for Digital Currency Governance Friday at its annual meeting in Davos, Switzerland. The main operating principle behind the initiative is that currencies can unlock opportunities for financial inclusion only if they are properly regulated.

Nearly all virtual currency projects, including Bitcoin, espouse the benefits of financial inclusion. The hope is that the world’s cash-dependent poor, who have no bank accounts and, in some cases, no form of government identification, will be able to participate in the formal financial system. 

Inclusion was a key slated goal of Facebook’s planned Libra cryptocurrency project. But so far, regulatory headwinds in the U.S. and Europe, have put the project’s planned 2020 launch into question. 

The consortium will bring together companies, financial institutions, government representatives, technical experts, academics, international organizations, and NGOs as well as members of the forum’s communities.

WEF Founder and Executive Chairman Klaus Schwab said that digital currency is a key area of interest for the forum. He called it “a cross-cutting topic that requires input across sectors, functions, and geographies.”

In addition to several financial institutions, blockchain industry professionals, including ConsenSys founder Joe Lubin, Calibra wallet’s David Marcus, BitPesa’s Elizabeth Rossiello, and Neha Nerula, director of MIT’s Digital Currency Initiative, also praised the initiative.

“We agree that good regulation is important for the success and safe adoption of digital currency platforms and are looking forward to continue to engage in this constructive conversation,” Marcus said.

Interoperability, inclusivity, and transparency will be at the heart of the initiative, the WEF said. Ultimately, the plan is to explore opportunities for virtual currencies and create a set of guiding principles for their design. 

To go along with that, the WEF recently gathered more than 40 central banks and a variety of experts to create a “toolkit” of advice for central bankers and digital currency policymakers. 

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Amy Castor has more than 20 years' experience in journalism. Her work on crypto and blockchain has appeared in consumer and trade publications throughout the U.S., including CoinDesk, Forbes, Bitcoin Magazine, and The Block.