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Finance Minister, Nirmala Sitharaman, has emphasized the need for global consensus on the regulation of cryptocurrencies. She stated that a global template may need to be created, and all countries must work together for effective regulation. However, she also highlighted that this does not mean controlling the underlying technology of distributed ledger technology (DLT), which has its own potential and strengths.
G20's Agenda on Crypto Regulation
Sitharaman revealed that India had proposed the inclusion of cryptocurrency regulation in the agenda of the G20, which has been accepted. The International Monetary Fund (IMF) has also published a paper on the impact of cryptocurrencies on macroeconomic stability, and the Financial Stability Board (FSB), established by the G20, will provide a report focusing on financial stability. These reports will be discussed during the G20 Finance Ministers and Central Bank Governors meeting in July, and a summit of Prime Ministers and Presidents of G20 nations will be held in India in September.
The Importance of Global Consensus
Sitharaman emphasized that regulating digital currencies, which are completely technology-driven and distributed, requires the involvement of all countries. No country can effectively control a technology-driven asset like cryptocurrency because technology knows no borders. Therefore, a global consensus and coordinated efforts are essential for effective regulation.
Creating a Global Template
Sitharaman stated that the G20 and organizations like the Organisation for Economic Co-operation and Development (OECD), IMF, and World Bank recognize the need to create a global template for cryptocurrency regulation. All countries must work together to develop this template, ensuring that the regulation is effective and takes into account the potential and strengths of DLT.
India's Approach to Inflation
Sitharaman acknowledged that India is currently facing inflation largely due to imported price hikes in fuel and fertilizers, which are putting pressure on the economy. However, she highlighted that despite these challenges, Prime Minister Narendra Modi has ensured that the people of India do not suffer. India's approach to inflation is focused on addressing supply-side factors while mitigating the impact of external price fluctuations.
India's Global Standing
Sitharaman pointed out that India's approach to navigating challenges such as the pandemic and the Russia-Ukraine conflict has gained recognition from the global community. The country is being observed for its resilience and ability to steer through difficult situations. She reiterated that India recognizes the potential of DLT and aims to regulate cryptocurrencies to ensure financial stability while leveraging the benefits of the technology.
As India assumes the presidency of the G20, Sitharaman has emphasized the need for a coordinated effort among countries and the creation of a global template, which is necessary for the effective regulation of cryptocurrencies. Sitharaman also highlighted that India acknowledges the potential of DLT and aims to strike a balance between regulation and leveraging the benefits of the technology.