A G20 Finance Ministers and Central Bank Governors meeting ended with an agreement to develop a global regulatory framework for cryptocurrencies. The Financial Stability Board (FSB), the International Monetary Fund (IMF), and the Bank for International Settlements (BIS) plan to issue recommendations in 2023.
The creation of a “global crypto policy” was a key topic of discussion at the first G20 Finance Ministers and Central Bank Governors (FMCBG) meeting in Bengaluru, India. The document issued after the meeting states that regulators will assess “the macro-financial implications” of creating global standards for cryptocurrency regulation and issue relevant recommendations.
For example, the Financial Stability Board (FSB) is expected to submit a document with recommendations on regulating stablecoins and any activities related to digital assets by July 2023. In turn, the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) are committed to producing a joint paper on the “macroeconomic and regulatory perspectives of crypto-assets” by September 2023.
The IMF will also produce a report on the “macro-financial implications of the potential introduction and widespread adoption” of central bank digital currencies (CBDC). The BIS will report on possible risk mitigation strategies related to crypto-assets. The release dates for these documents remain unspecified.
G20 members also agreed that a financial task force would examine options for using crypto-assets to finance terrorist activities and propose options to prevent this within a legal framework.
In addition, key areas of discussion during the FMCBG were:
- financial stability;
- regulatory priorities for the cryptocurrency market;
- political approaches to improve financial inclusion;
- increasing productivity for G20 through digital technology.
During the FMCBG meeting, Nirmala Sitharaman, India’s Finance Minister, called for a “coordinated effort.” She said that supporting “responsible technological innovations” will only ensure the stability of the financial system if global regulations for the crypto market are developed. Kristalina Georgieva, Chief Executive of the World Bank and IMF Managing Director, said that G20 members shouldn’t rule out the possibility of banning cryptocurrencies altogether.
U.S. Treasury Secretary Janet Yellen said creating a “strong regulatory framework” for digital asset activities should be a near-term priority for regulators. She added that U.S. authorities didn’t support the “outright banning of crypto activities.”
The BIS is actively exploring the possibility of central banks issuing an international digital currency and insists on regulating the process. Thus, pilot tests of cross-border CBDCs were successfully completed last year with the participation of central banks in Hong Kong, Thailand, China, and the UAE. Moreover, the BIS started testing CBDCs for cross-border payments together with the central banks of Norway, Sweden, and Israel.
