The G20 Finance Ministers and Central Bank Governors (FMCBG) on Friday vowed to put the plan to have a policy framework to deal with crypto assets on fast track, on the lines of the Delhi Declaration adopted by leaders of the nations in the grouping last month.
They also “welcomed” the report of the G20 Independent Expert Group on multilateral development banks (MDBs) with a view to enhancing lending capacity with greater resource mobilisation. In a communique issued after a two-day meeting in Marrakesh, Morocco, the FMCBG also stressed the need for “transformative changes” in the operating models and vision of these banks which are expected to play a very crucial role in helping the developing countries to meet the sustainable development goals.
On crypto policy framework, the FMCBG said that a detailed and action-oriented road map is essential to achieve the members’ common goals of macro-economic and financial stability and to ensure effective, flexible, and coordinated implementation of the policy with respect to these decentralised digital assets. The International Monetary Fund (IMF) and the Financial Stability Board (FSB) put together a Synthesis Paper on cryptos for the G20 which was presented to the FMCBG at its Gandhinagar meeting in July. The FMCBG has now adopted the road map proposed in the synthesis paper.
The paper contains an implementation roadmap for the crypto-asset policy frameworks. As per this, detailed “test” data on crypto used in making payments will be available by the end of 2025. The IMF will collect the data. India had previously highlighted the need to have data on crypto before putting in place any laws controlling them. Despite a debate that raged for a while, India has neither legalised cryptos, nor imposed penalties on those who deal in them. Amidst this ambiguity, the Budget 2022 imposed a 30% tax on all crypto investments, besides a 1% TDS on crypto trade. Of course, the Reserve Bank of India has been vocal about the risks inherent in this new asset class. Essentially, the Delhi declaration seeks all jurisdictions to accept a baseline for regulation and oversight of these assets, while holding their autonomous policy space, even as it is almost clear that none of the G20 members would accord legal tender status to cryptocurency.
The finance heads of the G20 countries also appreciated the work undertaken by the G20 Independent Expert Group (IEG) which has submitted its report in two parts on how to make MDBs better, bolder and bigger to stay relevant. The second part of the report which was submitted in the Marrakesh meeting laid a roadmap to implement the triple agenda of reform for the MDBs that would triple annual sustainable lending levels to $390 billion per year by 2030. The IEG was set up Indian Presidency convened by NK Singh and Larry Summers. “We note that transformative changes are required in MDBs’ vision, operating models and financing capacities. We encourage MDBs to enhance private capital mobilization through supporting enabling conditions, innovative risk-sharing instruments and new partnerships to maximize their development impact. This, along with the implementation of all appropriate CAF recommendations, would maximize the leverage effect of potential capital increases,” the FMCBG said.
Going forward, it asked the International Financial Architecture Working Group to deliberate on the IEG recommendations in consultation with MDBs and suggest a way forward for better, bigger and more effective MDBs, including ways to work together better as a system, in their meeting in April 2024. The FMCBG communique drew guidance from the G20 New Delhi Leaders Declaration and benefited significantly from the consensus that was reached at the Leaders’ Summit last month. The communique was unanimously adopted at the fourth and final meeting of the G20 FMCBG under the Indian Presidency in Marrakesh on the sidelines of the IMF-WB Annual Meetings.
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