On the inaugural day of the G20 Leaders’ Summit held in New Delhi, top representatives from the world’s most influential economies achieved a consensus on the adoption of the G20 Leaders’ Summit Declaration. This extensive 37-page document lays out comprehensive policies and regulations governing the rapidly evolving cryptocurrency sphere, as well as other important topics such as accelerating progress on sustainable development goals (SDGs), and green development pact for a sustainable future. The consensus by G20 nations on this global crypto regulation framework was made ahead of the event and represents a significant milestone in the evolving landscape of digital currencies.
The preamble of the G20 New Delhi Leaders’ Declaration says, “We are One Earth, One Family, and we share One Future.” Financial Inclusion and sustainable future are the major focus of the declaration, along with reforming international financial institutions, managing global debt vulnerabilities, and women empowerment.
The summit, currently hosted under India’s presidency, serves as a pivotal forum for addressing global economic concerns and fostering cooperation among G20 nations.
Crypto-assets: Policy and Regulation
In light of the exponential growth and escalating global significance of cryptocurrencies, the G20 leaders have unequivocally committed to closely monitor and manage the associated risks. The Leaders’ Declaration wholeheartedly endorses the high-level recommendations put forth by the Financial Stability Board (FSB) for the regulation, supervision, and oversight of crypto-asset activities, markets, and global stablecoin arrangements.
A focal point of concern highlighted in the document is the imperative need for consistent global implementation to thwart regulatory arbitrage. To ensure uniformity, the G20 has enjoined the FSB and Standard Setting Bodies (SSBs) to vigorously advocate for the effective and timely execution of these recommendations.
Additionally, the Leaders’ Declaration extends a warm welcome to the joint work plan crafted by the FSB and SSBs, tailor-made for the crypto asset domain. It also acknowledges the momentous significance of the International Monetary Fund (IMF) and FSB’s Synthesis Paper, which includes a comprehensive Roadmap aimed at establishing a coordinated and all-encompassing policy and regulatory framework. This framework will take into account an extensive array of risks, including those unique to emerging market and developing economies (EMDEs). It will also ensure compliance with the ongoing global implementation of the Financial Action Task Force (FATF) standards dedicated to combating money laundering and terrorism financing risks.
The declaration lays the foundation for Finance Ministers and Central Bank Governors to deliberate on advancing this Roadmap during their scheduled meeting in October 2023. The G20 also expresses appreciation for the insights provided in the Bank for International Settlements (BIS) report titled “The Crypto Ecosystem: Key Elements and Risks.”
Central Bank Digital Currency (CBDC)
In another pivotal development, the G20 leaders have embraced discussions concerning the potential macro-financial implications arising from the introduction and widespread adoption of Central Bank Digital Currencies (CBDCs). This marks a significant stride towards recognizing the increasing influence of CBDCs on cross-border payments and the international monetary and financial system.
The Leaders’ Declaration commends the efforts of the Bank for International Settlements (BIS) Innovation Hub (BISIH) for their report titled “Lessons Learnt on CBDCs.” Furthermore, it eagerly anticipates the forthcoming IMF Report on “Potential macro-financial implications of widespread adoption of CBDCs,” expected to provide a more comprehensive exploration of the subject.
The discussions revolving around CBDCs at the G20 summit signify the growing acknowledgment of the transformative potential inherent in digital currencies issued and regulated by central banks. These deliberations lay the groundwork for further exploration and collaboration among G20 members to harness the advantages and address the challenges tied to CBDC adoption.
The adoption of the G20 Leaders’ Summit Declaration regarding cryptocurrency regulation and the initiation of discussions concerning CBDCs underscore the unwavering commitment of the world’s foremost economies to responsibly navigate the evolving financial landscape through collective action. As the summit unfolds, these developments are poised to play a pivotal role in shaping the future of global financial governance.