India’s position, that a currency cannot be treated as such unless it us “sovereign-backed”, has been “acknowledged” by many G20 countries, Union finance minister Nirmala Sitharaman said on Saturday following the meeting of finance ministers and central bank governors (FMCBG) the grouping.
On a specific query — whether the G20 members favour a ban on private cryptocurrencies — she said: “There’s almost a clear understanding that anything out of the central bank is not currency and this is the position that India has been taking for a very long time.”
While briefing media after the conclusion of the meeting in Bengaluru, Sitharaman said members also supported India’s view that the technology behind cryptocurrencies could be useful for various purposes. HT on February 21 reported that most G20 members would endorse Indian central bank’s position on the cryptocurrency while supporting the blockchain technology that underpins it.
The FMCBG meeting was the first major ministerial engagement under G20, of which India holds the presidency for now.
Reserve Bank of India (RBI) governor Shaktikanta Das said the delegates took interest in the central bank digital currency (CBDC) pilot projects in some countries, including India. “There is now wide recognition and acceptance of the fact that cryptocurrencies or crypto-assets or crypto products, whatever name you call it, they involve several major risks to financial stability, to monetary systems, to cyber security… and they need to be looked at. And going forward, the effort is to develop an international framework, an international architecture to deal with this problem…,” he said.
The International Monetary Fund (IMF) and the Financial Stability Board (FSB) are working on it, and will come up with studies later this year — these will form the basis for future discussions to develop an international architecture, he added.
Sitharaman said the matter was discussed by a panel on February 23, 2023 and would again come up during spring meetings in April 2023 in Washington and in July 2023.
A synthesis of the two studies – by IMF and by FSB – would be considered in September this year. “Which will lead towards creation of a global policy approach on this matter,” she added.
“Canadian Central Bank Governor cautioned that crypto-asset should not be given the ‘regulatory seal of approval’… ‘without a well-thought out approach and a framework for implementation’…,” she said, quoting the governor.
The World Bank states that the views of all developing countries should also be included in any policy framework. The European Central Bank (ECB) “thanked India for putting crypto-assets on the priority map and stated that the global framework and understanding of macro-implications is very-very fundamental,” the finance minister added.
Sitharaman said other key issues deliberated by the forum included debt vulnerabilities of developing countries (particularly Sri Lanka, Ghana, Gambia and Ethiopia), the voice of the Global South, restructuring of Multilateral Development Banks (MDBs), financing for ‘cities of tomorrow’, and sustainable development goals (SDG) with a special emphasis on climate financing.
Economic affairs secretary Seth added that particularly two matters – debt relief to vulnerable countries and climate financing — were quite challenging but the discussions were “in very cordial atmosphere”.
Sitharaman said the objective of the FMCBG’s meeting is to seek guidance from the finance ministers and central bank governors on key areas that are being undertaken by the G20 finance track.
Citing Prime Minister Narendra Modi’s video message to the forum on Friday, Sitharaman said finance ministers and central bank governors were “custodians of the leading economies and monetary systems of the world”. “Hon’ble Prime Minister urged us to bring back stability, confidence, and growth to the global economy,” she said.
In the three-day meeting, 500 delegates, including representatives of guest countries and heads of various international organisations, participated, she said. There were only four countries whose finance ministers and central bank governors could not attend the meetings in person — China, Mexico, Russia and Turkey. “But, they participated virtually,” she added.
In order to become voice of the global south and the developing countries India invited guests such as Nepal, Bangladesh, Senegal, Morocco, Egypt, Nigeria, Oman and Mauritius to attend the forum.
The Group of Twenty (G20) comprises 19 countries — Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom and United States and the European Union. The G20 members represent around 85% of the global GDP, over 75% of the global trade, and about two-thirds of the world population.