India at helm, G20 eyes common plan on crypto risks: FM Nirmala Sitharaman

To deal with the risks accompanying cryptocurrencies in the wake of recent ‘shocks’ in the cryptocurrency market, developing a common framework to tackle the digital currency risks will be the primary focus under India’s Group of 20 (G20) Presidency, Union Finance Minister Nirmala Sitharaman told an American think-tank in response to a query, on Tuesday. 

“Cryptocurrencies are a very important part of the discussion under India’s G20 Presidency, given so many collapses and shocks in cryptocurrencies. We seek to develop a common framework for all countries to deal with this matter. We are not expecting all of them to agree to it, but at least discuss (it),” said Sitharaman.

Last year, following a spat with Binance, the Bahamas-based cryptocurrency exchange FTX had gone bankrupt, which triggered a huge sell-off in the market and reduced liquidity, thus highlighting the vulnerability of cryptocurrencies as an asset class.

Sitharaman is currently visiting the US. Her visit started Tuesday, and she will be there for a week. She will be attending spring meetings and a G20 finance ministers’ meeting.

Responding to a question on issues that will be of importance under the Indian Presidency, Sitharaman said that bringing together all countries to address the issue of debt distress of middle- and low-income countries will remain on top.

“In G20, there is an opportunity for India to bring all countries together to address debt distress in middle-income and low-income countries on account of continuing geopolitical tensions and the pandemic. Multilateral institutions are coming up with resolutions for debt-laden countries in three to five years, which is not excusable. Although, multilateral bodies are now speeding up the process,” she said.

On the question of the usefulness of multilateralism, Sitharaman said India is committed to open and free trade and is actively pursuing trade agreements with several countries and regional groups. Still, it would like multilateral institutions to hear the voice of many emerging countries as well.    

“I would love the World Trade Organization (WTO) to be a lot more progressive, listen a lot more to all countries, and be fair to all countries. It has to give more space to hear voices of countries that have something different to say, and not just hear, but also somewhat heed, because today’s message for the WTO should be to have more openness,” she said.

Sitharaman also said that to achieve a level playing field in global trade, it is necessary to prioritise domestic production, as India hopes to produce and meet both internal and external demands, although there will be some collateral damage in the process.

“You need to have value chains come to India, come and produce in India, not just for India, but to export from India, for which again, we have come up with a production-linked incentive scheme, particularly in 13 such areas, which are priority sectors, sunrise sectors, where India didn’t produce at all earlier. At the same time, you need to get your raw material and intermediaries which otherwise you do not have. It’s not as if you’re going to be so blindfolded that you’ll just take a decision and it’ll have no impact whatsoever outside,” she said.

During her interaction, Sitharaman also drew attention towards a lack of funding for developing countries to achieve their climate objectives. She said India has come up with very ambitious, nationally determined goals in its fight against climate change and has been meeting its climate commitments through its funding.

“Funding is there, but not available. Committed, but not disbursed yet. So the $100 billion we’ve been talking about has not happened at all. That could be something many countries will want to speak about,” she said.

Earlier in the day while attending a round table by the US-India Business Council, industry executives raised the issue of opportunities to further enhance India’s investment ecosystem, including policies that could deepen India’s capital markets and enable Indian start-ups to tap into global investment via direct overseas listings, with the finance minister.

The industry also expressed support for frameworks that would allow the private sector to leverage digital payments data to expand financial inclusion and develop new financial products and credit instruments for the Indian market.