Context:
- Recently, the Finance Ministers and Central Bank Governors (FMCBG) from G20 nations adopted a roadmap for regulating crypto assets proposed by the Financial Stability Board (FSB) and the International Monetary Fund (IMF) at their meeting at Marrakesh in Morocco.
Roadmap for Crypto Regulation: Proposed by Financial Stability Board (FSB) and IMF
- This was the fourth and final G20 Finance Ministers and Central Bank Governors (FMCBG) meeting under the Indian presidency, with previous meetings held in Washington, Bangalore, and Gandhinagar.
- Ministers and Governors adopted the Roadmap proposed in the IMF-Financial Stability Board synthesis paper on Crypto assets.
- The IMF and the FSB created this paper at the request of the Indian G20 Presidency to synthesise policy suggestions and criteria.
- The paper offers a comprehensive set of policy and regulatory recommendations aimed at identifying and addressing the macroeconomic and financial stability risks associated with crypto assets.
International Monetary Fund (IMF)
- The IMF was conceived in July 1944 at the United Nations Bretton Woods Conference.
- Functions: Providing loans and concessional financial assistance to member countries experiencing actual or potential balance-of-payments problems.
- Headquarters: Washington D.C, USA.
Financial Stability Board (FSB)
- Financial Stability Board is an international body that monitors and makes recommendations about the global financial system.
- Headquarters: Basel, Switzerland.
- Its decisions are not legally binding on members.
- India is a Member of the Financial Stability Board
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What is crypto currency and how does it work?
- Cryptocurrency is a digital form of currency secured by Blockchain Technology.
- It operates in a decentralized manner, free from government or institutional control.
- Notable examples include Bitcoin, Ethereum, and Litecoin.
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G20 Roadmap on Crypto Assets: It is an action-oriented roadmap that will help coordinate global policy as well as develop mitigating strategies and regulations on such assets.
- Balanced Approach to Bans: The IMF and Financial Stability Board paper advocates for comprehensive oversight of crypto instead of a blanket ban.
- It also focuses on the implications for Emerging Markets and Developing Economies (EMDEs), which are anticipated to bear the brunt of the crypto market’s volatility.
- Safeguarding Monetary Sovereignty and Stability: Paper highlights the importance of preserving monetary sovereignty and stability when dealing with Virtual Digital Asset (VDA).
- This involves not granting official currency or legal tender status to VDAs, which helps protect traditional monetary systems and national currency stability.
- Clear Tax Treatment: Unambiguous tax treatment is essential for VDAs. Clear and consistent tax policies prevent evasion and ensure that VDAs contribute fairly to national revenues.
- Monitoring the Impact on the International Monetary System (IMS): Given the global reach of VDAs, their impact on international financial stability must be monitored closely to safeguard the integrity of the IMS.
News Source: The Indian Express
| Attempt the Prelims Question
The terms ‘WannaCry, Petya and EternalBlue’ sometimes mentioned in the news recently are related to; (2018)
(a) Exoplanets
(b) Cryptocurrency
(c) Cyber attacks
(d) Mini satellites
Ans: (b) |
14 Oct 2023
