India hopes to broaden G20 discussion on crypto assets beyond financial integrity concerns

New Delhi: With a view to inform policymakers on the broader macroeconomic and financial stability implications of crypto assets, the Indian Presidency requested the International Monetary Fund (IMF) to prepare a discussion paper on the topic for the 2ndAG20 Finance and Central Bank Deputies Meeting held in Bengaluru.

During the meeting, a seminar titled "Policy Perspectives: Debating the Road to Policy Consensus on Crypto Assets" was held, as part of the Presidency's efforts to broaden the dialogue around crypto assets. The IMF speaker, Tommaso Mancini-Griffoli, presented the discussion paper during the event, highlighting 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.

Mancini-Griffoli underlined that the purported benefits of crypto assets include cheaper and faster cross border payments, more integrated financial markets, and increased financial inclusion, but these are yet to be realised.

Problems with interoperability, safety and efficiency cannot be guaranteed by the private sector and critical digital infrastructure/platforms for ledgers should be viewed as a public good, he said.

He also flagged the global information gaps pertaining to the crypto asset universe and the need to build a deeper understanding of the interlinkages, opportunities and risks pertaining to crypto assets under the aegis of the G20.

The seminar was attended by Deputies from G20 member countries, international organisations as well as eminent experts on the subject. The discussions covered a wide range of topics, including the need for a common taxonomy and a systematic classification of the crypto asset universe, benefits and risks of crypto assets, macroeconomic policy questions that needed to be evaluated further, and, financial stability issues and regulatory responses.

To complement the ongoing dialogue on the need for a policy framework, the Indian Presidency has proposed a joint technical paper by the IMF and the FSB which would synthesise the macroeconomic and regulatory perspectives of crypto-assets. This would help in the formulation of a coordinated and comprehensive policy approach to crypto assets.

The international organisations are expected to present their joint paper during the 4th Finance Ministers and Central Bank Governors meeting in October 2023. 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.

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.