Acceptance of Crypto Financial Stability Risks at G20 FMCBG Meeting

Acceptance of Crypto Financial Stability Risks at G20 FMCBG Meeting

The G20 finance ministers and central bank governors have widely accepted that cryptocurrencies are risks to financial stability, monetary systems, and cyber security said the Reserve Bank of India (RBI) governor. Crypto regulation was among the key topics discussed during the G20 meeting over the weekend.

G20 Agrees on Major Risks of Crypto Assets

Reserve Bank of India (RBI) Governor, Shaktikanta Das, spoke on cryptocurrency during a media briefing on Saturday following the G20 meeting of finance ministers and central bank governors in Bengaluru. The state-owned media, News on Air reported:

"Das told the media that there is now wide recognition and acceptance of the fact that cryptocurrencies or crypto assets are major risks to financial stability, monetary systems, and cyber security."

According to the state-owned media reports, the G20 delegates also expressed interest in central bank digital currency (CBDC) pilot projects in India and other countries. The Reserve Bank of India began its digital rupee pilots in November and December last year.

Strong Regulatory Framework Needed

At the G20 meeting of finance ministers and central bank governors, Union Finance Minister Nirmala Sitharaman explained that anything not backed by the central bank is not a currency, and India has taken this stand for a very long time.

India asked the International Monetary Fund (IMF) and the Financial Stability Board (FSB) to present a joint paper on crypto to help formulate "comprehensive" crypto policies. IMF Managing Director Kristalina Georgieva has called for more crypto regulation and said that banning should not be off the table. The IMF executive board recently published guidance for developing effective crypto policies.

The RBI has repeatedly insisted on banning cryptocurrencies on various forums, specifically those that are not backed by the central bank. However, the Union Finance Minister had earlier said that banning or regulating would not be effective without international cooperation. US Treasury Secretary Janet Yellen said that the US has not suggested the outright banning of crypto activities, but it is "critical" to establish a strong regulatory framework for crypto.

What is your take on the G20 finance ministers and central bank governors agreeing that crypto is a major risk to financial stability? Please post your comments.