India's G20 Presidency Aims at a Coordinated Policy to Tackle Risks Posed by Cryptocurrencies

Finance Minister, Nirmala Sitharaman, has announced that India's G20 presidency aims to develop a common framework for all countries to deal with risks associated with cryptocurrencies following recent market shocks.

Crypto risks

Speaking at a Peterson Institute for International Economics discussion, Sitharaman said, "Cryptocurrencies are a very important part of the discussion under the #G20India presidency, given so many collapses and shocks in cryptocurrencies. We seek to develop a common framework for all countries to deal with this matter."

The event that brought this issue to light was the bankruptcy of FTX and its spat with Binance, which triggered a huge sell-off in the market and reduced liquidity. This event made the world realise the vulnerability of this asset class as they do not have any underlying value.

Global debt distress

The G20 presidency will also address debt distress in middle and low-income countries like Sri Lanka and Ghana, working to bring together all countries to facilitate coordinated debt treatment. India has been pressing for ways to tackle the aggravated debt vulnerabilities facing developing nations, mainly on account of the continuing geopolitical tensions and the pandemic.

The mounting debt vulnerabilities of developing nations could trigger a global recession and push millions to extreme poverty.

During the first G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in February, it was agreed to strengthen multilateral coordination by official bilateral and private creditors to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries. The World Bank and IMF also hold a Global Sovereign Debt roundtable. Initial discussions happened at the G20 FMCBG meeting in Bengaluru. She said that adding India's G20 presidency will create discussion and sharing of information on this issue and will be taken forward positively.

Foreign investments in India

Sitharaman also noted that emerging markets have G20 presidencies for three consecutive terms from Indonesia in 2022, India in 2023, and Brazil next year. This will bring views of emerging markets to the forefront and the Global South's voice onto the G20 table.

On the business environment in the country, Sitharaman said foreign investments have kept coming to India. "I would tell the prospective investors to come and look at what's happening in India rather than listening to perceptions being built by people who've not visited the ground but writing reports.”

In a world full of post-pandemic challenges, Sitharaman said that India offers policy certainty, skilled manpower, high digital tech adoption rate, resulting in a host of opportunities for investment. Sitharaman exhorted the participants to become part of India's exciting transformational journey towards greater prosperity, better standards of living for its citizens and higher returns for investors.

The finance minister also highlighted India's robust digital public infrastructure, such as Open Network for Digital Commerce (ONDC) and Account Aggregator platform, which have enabled small entrepreneurs to access credit and other digital services.

India's economic transformation

Sitharaman also highlighted India's conscious policy choices, and structural and governance reforms that laid the foundation for the Indian economy to support growth at its full potential. "Free trade agreements are being signed in a much faster way nowadays. We've just concluded one with Australia. Earlier, we concluded with UAE, Mauritius, and with ASEAN. We have extended the quota-free and tariff-free regime to least developed countries," she said. The finance minister also highlighted India's robust digital public infrastructure, such as Open Network for Digital Commerce (ONDC) and Account Aggregator platform, which have enabled small entrepreneurs to access credit and other digital services.