India, which is now in charge of the G20, has asked the IMF and Financial Stability Board (FSB) to collaborate on developing a technical paper on crypto assets that may be used to develop a coordinated and comprehensive strategy to regulate them.
The international organizations want to deliver their joint text at the 4th Finance Ministers and Central Bank Governors Conference in October 2023, according to a statement from the finance ministry.
To augment the continuing conversation regarding the need for a policy framework, the Indian Presidency has requested a joint technical study by the International Monetary Fund (IMF) and the FSB that would synthesize the macroeconomic and regulatory elements of crypto-assets. This would make it easier to create a thorough and well-coordinated policy approach to crypto assets.
It stated that the IMF's discussion paper, the policy seminar, and the overall IMF-FSB document are all intended to incorporate the policy concerns about the macro-financial and regulatory aspects of crypto assets. This is anticipated to make it easier to get a global agreement on a coordinated and thorough approach to policy regarding crypto assets.
Despite the fast growth of the cryptocurrency industry, there is no comprehensive global legislative framework for virtual money. Concerns regarding the complexity and volatility of crypto assets, as well as the growing interconnectedness between them and the traditional financial system, have prompted policymakers to call for tougher regulation.
It said that several international standard-setting organizations, including the Financial Action Task Force (FATF), Financial Stability Board (FSB), Committee on Payments and Market Infrastructures (CPMI), International Organization of Securities Commissions (IOSCO), and Basel Committee on Banking Supervision (BCBS), have been coordinating the regulatory agenda while carrying out their respective institutional mandates.
India stated that for G20 members to develop a coordinated and comprehensive policy response, the G20 discussion on crypto assets will need to take a data-based and informed approach to the global challenges and opportunities of crypto assets. India added that it hopes to expand the discussion beyond financial integrity concerns and capture the macroeconomic implications and widespread adoption of crypto in the economy.
To inform policymakers about the broader macroeconomic and financial stability implications of crypto assets, the Indian Presidency reportedly asked the IMF to prepare a discussion paper on the topic for the 2nd G20 Finance and Central Bank Deputies Meeting, which will be held in Bengaluru on February 23, 2023.
As part of the Presidency's attempts to expand the conversation surrounding crypto assets, a seminar titled "Policy Perspectives: Discussing the Road to Policy Consensus on Crypto Assets" was held during the aforementioned meeting, it stated.
The discussion paper emphasized the impact of crypto adoption on a country's economy's internal and external stability as well as the structure of its financial system. Tommaso Mancini-Griffoli, an IMF speaker, presented it at the event.
Mancini-Griffoli emphasized that some of the purported benefits of crypto assets, such as less expensive and quicker cross-border payments, more integrated financial markets, and more financial inclusion, have already been realized.
He proceeded by noting that key digital infrastructure and platforms for ledgers should be viewed as a public benefit because the private sector cannot guarantee concerns with interoperability, safety, or efficiency.
He also emphasized the necessity for the G20 to have a better understanding of the relationships, opportunities, and risks related to the world of crypto assets.
The discussions covered a wide range of topics, including the requirement for a common taxonomy and a systematic classification of the crypto asset universe, the benefits and risks of crypto assets macroeconomic policy questions that required further evaluation, and financial stability issues and regulatory responses.
The event, according to the statement, has aided in starting a wider conversation about crypto assets, but it has also raised several important regulatory issues that regulators and politicians need to carefully consider.
It was mentioned that there is an existential question of whether crypto assets are the best approach to address the issues with the present global financial systems, in addition to evaluating how crypto assets will impact the whole economy.
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