New Delhi: India will evaluate the recommendations contained in a paper written by the International Monetary Fund (IMF) and the G20 risk watchdog, the Financial Stability Board (FSB), which outlines a roadmap for regulating crypto assets and integrating digital assets into digital financial systems before deciding on it. Ajay Seth, Secretary, Ministry of Economic Affairs, said:
On the sidelines of the G20 summit on Sunday, Seth said that the leaders approved the required regulations, oversight and supervision on unbacked cryptocurrency assets.
“With this framework in mind, we have to analyze our position with reference to what the leaders agreed upon. Given that, we will decide our position in the coming months,” Seth said.
Seth stressed that emerging economies face higher risks from crypto assets, especially those that are not backed. “Looking at the risks, it (the synthesis paper) has a clear acknowledgment that the risks are higher for emerging economies,” Seth said.
He added that a clear understanding has been reached among G20 leaders on the basic elements required for a good set of cryptocurrency regulations and the initial time frame for their implementation.
“Based on the consensus we have been able to build, we will carefully consider these recommendations, consider our own policies and then take further action,” Seth said.
The joint IMF-Financial Stability Board synthesis paper, released on September 7, stated that a blanket ban on crypto assets may be difficult to impose, noting that increased reliance on these assets could undermine monetary policy transmission.
The paper also called on countries to implement the AML/CFT standards established by the Financial Action Task Force regarding virtual assets and virtual asset service providers.
It also recommended developing a common framework and collecting “test data” on digital money and crypto assets for use as a means of payment made available by fintech companies.
Seth added that India expects further discussions on the recommendations made by the synthesis paper and on ways to implement them in a faster, faster and more comprehensive manner.
The Reserve Bank of India had earlier called for a complete ban on cryptocurrencies.
The way forward will be determined following the meeting of G20 finance ministers and central bank governors in Marrakesh, Morocco, scheduled for October.
Seth said that the current global economic growth is affected by rising inflation and slowing global trade. He added that the tightening of monetary policy due to high inflation, especially in advanced economies, will affect the overall global growth.
“World trade was at a low level and the high growth rate that was seen earlier is not visible (anymore),” he said.
“On the commodities side, the decline in global trade is affecting us (India). At the same time, services exports are doing very well. So it will have a limited impact,” Seth added.
Meanwhile, regarding the discussions on the Climate Resilience Debt Clause (CRDC) at the G20, many member states felt the need for more technical work, said a senior government official.
“While some countries have said it is time to make decisions on CRDC, other countries feel that further discussions should take place,” the official added.
On September 9, after G20 leaders reached consensus on the summit declaration, Finance Minister Nirmala Sitharaman said that India was “going well” in achieving the fiscal track targets under its G20 presidency.
Major achievements of the financial pathway under India’s G20 presidency include a plan to strengthen multilateral development banks to address common challenges, laying the building blocks for a globally coordinated policy and regulatory framework for crypto assets, achieving financial inclusion and productivity gains through digital public infrastructure, and resolving the debts of low- and middle-income countries. Financing the cities of tomorrow.