HomeIndian EconomyG20 Finance Track will take up cryptocurrency, MDB reforms next

G20 Finance Track will take up cryptocurrency, MDB reforms next

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Finance ministers and central bank governors of G20 nations will meet in Marrakech in October to deliberate over possible reforms at multilateral development banks (MDBs), crypto-asset regulations and the global economic outlook, economic affairs secretary Ajay Seth told Banikinkar Pattanayak in an interview. Edited excerpts.

What are the Finance Track’s most significant outcomes under India’s G20 presidency?

There are many important outcomes of the Finance Track… Three particularly relevant in the current global context are a widening of the discussion on strengthening MDBs incorporating perspectives of the Global South; firming up the building blocks for a globally coordinated and comprehensive policy and regulatory framework for crypto assets; and advancing financial inclusion and productivity gains through digital public infrastructure.

How does G20 plan to achieve better, bigger and more efficient MDBs and by when?

G20 leaders have committed to pursuing ambitious efforts to evolve and strengthen MDBs.The call for bigger, better and more effective MDBs is based on this commitment. There are three key elements, as reflected in the New Delhi Leaders’ Declaration, to achieve this goal. First, the G20 independent expert group on strengthening multilateral development banks was established and it has submitted the first (of its two-volume) report, which recommends a triple agenda that dovetails with the call for better, bigger and more effective MDBs.Second, there is agreement to collectively work towards boosting the World Bank’s financing capacity. Here, options will be explored to deliver a powerful boost to the International Bank for Reconstruction and Development to support low- and middle-income countries.Third, there is endorsement of the G20 roadmap for implementation of the recommendations of the independent panel on capital adequacy frameworks (CAF) for MDBs. The CAF recommendations are focused on enabling MDBs to use their existing resources effectively. The roadmap estimates that implementation of CAF measures will potentially yield additional lending headroom of about $200 billion over the next decade.The 2023 IMF/World Bank annual meeting and the G20 FMCBG (finance ministers and central bank governors) meeting, which will be held on its sidelines, will discuss the two volumes of the report of the independent expert group. The World Bank will be presenting the progress on its evolution exercise, which can set a good template for the reforms being put in place by other MDBs. The development bank agenda is a multi-year exercise and involves the engagement of multiple stakeholders. Therefore, it is not possible to set a definitive timeline (to complete reforms) at this juncture. Well-calibrated and properly sequenced strategies need to be put in place by MDBs within the respective governance frameworks, and the guidance emanating from G20 can support MDBs in this endeavour.

What can we expect from the next finance track meeting under India’s G20 presidency in Marrakech?The focus of the fourth FMCBG meeting, scheduled to be held in Marrakech, will be on the MDB agenda and crypto assets. Apart from this, discussions will also focus on the current global economic outlook.According to the estimate put out in the New Delhi Declaration, developing nations need about $5.9 trillion to meet climate goals by 2030. How does G20 propose to meet this?

This massive requirement will have to be met by substantially-enhanced mobilisation of financial resources from all sources. G20 countries recognised the need to drastically raise global investments to meet our climate goals under the Paris Agreement. They have made a call for setting up an ambitious, transparent and trackable New Collective Quantified Goal of climate finance in 2024, based on the needs and priorities of developing countries.New and innovative mechanisms would be required to mobilise resources. The G20 sustainable finance working group has made clear recommendations on the mechanisms and instruments that could support the timely and adequate mobilisation of resources for climate finance.

How do you plan to build the Global Digital Public Infrastructure Repository (GDPIR) and what are the objectives behind this plan?

GDPIR is expected to be created on the basis of information on digital public infrastructure (DPI) that will be shared voluntarily by G20 and beyond and will be hosted on a website. DPI as an approach to rapidly advance financial inclusion has also been included in the new G20 2023 Financial Inclusion Action Plan developed under the Indian presidency. NPCI International Payments Ltd (an arm of the National Payments Corporation of India) aims to implement UPI-like systems globally. It is engaging with multiple Indian missions abroad to globalise the UPI payment rails, and has reached out to many countries for UPI and RuPay globalisation. It has initiated engagement with central banks in more than 80 countries for UPI and RuPay acceptance and the cross-border remittance corridor.

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