G20 mulls converting its global infra hub into a multilateral body

The G-20 is considering converting its Global Infrastructure Hub into a multi-lateral institution on the lines of the Financial Stability Board. If the plan goes through, it will be the second instance of a G-20 initiative being turned into a full-fledged organisation after the FSB.

“This is a decision that will require consensus among G-20 members. But the plan is to turn GIH into a body similar to FSB,” a G-20 official aware of the deliberations told Business Standard. The new infra-focused body will be a non-treaty based organisation.

Unlike most multilateral financial institutions such as the International Monetary Fund and the World Bank, the FSB lacks a legal form and any formal power, given that its charter is an informal and non-binding memorandum of understanding for cooperation adopted by its members.

However, the FSB still provides important financial directions to the G-20 members. For example, it is said to be coming up with global draft regulations on cryptocurrency, which the member countries could adopt.

The official quoted above said GIH’s transformation into a multilateral body will expand its scope of work. It is planning to work with organisations like World Bank and IMF to increase the scale of sustainable infrastructure and climate resilient financing.

Also, it may come up with standardised definitions of green infra projects and may work with financial institutions to ease project financing norms. “The Basel norms may have hurt infrastructure financing more than help them. So some work in that direction is expected,” the person said.

However, the official warned that the decision to turn the hub to a multilateral body will require further discussion among members, and no quick decision is expected.

Currently, the GIH’s work is limited to acting as a knowledge sharing hub, to produce data and insights that inform policy and infrastructure delivery.