G20: India asks IMF, FSB to draft new technical paper on crypto assets

G20 President India on Saturday asked the International Monetary Fund (IMF) and Financial Stability Board (FSB) to come up with a joint technical paper on the macroeconomic and regulatory perspectives of crypto assets.

This proposal by the host country came at a panel discussion on the regulation of crypto assets, as part of the G20 meeting of Finance Ministers and Central Bank Governors (FMCBG).

“This would help in the formulation of a co-ordinated and comprehensive policy approach to crypto assets. The international organisations are expected to present their joint paper during the 4th FMCBG meeting in October 2023,” said an official statement.

“The paper is expected to be supplemented by similar such discussion seminars on the side lines of other G20 meetings held under the Indian Presidency. The discussions are further expected to build informed debate within the G20 meetings and lead to formulation of a coordinated and comprehensive policy approach,” it stated.

At the panel discussion in Bengaluru, the IMF presented another paper at India’s request, which highlighted the consequences of crypto adoption on the internal and external stability of a country’s economy as well as on the structure of its financial system.

“The event has helped initiate a broader dialogue on crypto assets, but also raises several pertinent policy questions that policymakers and regulators need to evaluate closely. In addition to evaluating the consequences of crypto assets to the broader economy, there is also an existential question on whether crypto assets are indeed the optimal solution for existing challenges in global financial systems,” the statement said.

India hopes to broaden the G20 discussion on crypto assets beyond financial integrity concerns and capture the macroeconomic implications and widespread crypto adoption in the economy. This will require a data-based and informed approach to the global challenges and opportunities of crypto assets, allowing G20 members to shape a coordinated and comprehensive policy response, it said.

“In their entirety, the IMF’s discussion paper, the policy seminar and the joint IMF-FSB paper are expected to integrate the policy questions pertaining to macro-financial and regulatory perspectives of crypto assets and facilitate a global consensus on a well-coordinated and comprehensive policy approach to crypto assets.”

Faster debt resolution

Meanwhile, in a separate statement, IMF Managing Director Kristalina Georgieva thanked Finance Minister Nirmala Sitharaman and Reserve Bank of India (RBI) Governor Shaktikanta Das for India’s hospitality and called for faster resolution of debt for countries within and outside the common debt resolution framework, including Sri Lanka.

Debt resolution has been one of the few initiatives where there was broad agreement among nations at the Bengaluru G20 FMCBG meeting.

“Sovereign debt vulnerabilities, already elevated before the pandemic, have been exacerbated by the shocks stemming from Covid-19 and Russia’s war against Ukraine. This is particularly the case for developing and low-income countries with very limited policy space and huge development needs. It is therefore imperative for the G20 to strengthen the debt architecture,” said Georgieva.

 “More predictable, timely, and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname,” she added.

Georgieva said the goal of the new Global Sovereign Debt Roundtable (GSDR) – co-chaired by IMF, World Bank and India - is to bring together creditors and debtor countries to discuss key issues that can facilitate the debt resolution process.

“We launched the GSDR under the auspices of India’s G20 presidency last week at the deputies’ level, followed by an engaged and constructive principal meeting earlier today. We will further build on this discussion during the World Bank-IMF Spring Meetings in April,” she said.