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Debt Threats, Cryptos Dominate G20 Meeting Agenda 2023

Debt Threats, Cryptos Dominate G20 Meeting Agenda 2023

FM and central bank governors will concentrate on bolstering MDBs.

The Finance Track representatives for the G20 will gather in Gandhinagar, Gujarat, on Friday to finalize key deliverables on challenges with debt vulnerability, strengthening MDBs, regulation of crypto assets, the global economy, and health. The FMCBG meeting is scheduled for July 17–18.

Finance Ministers, Central Bank Governors from the G20 members, and representatives from guest nations and international organizations will attend the third G20 FMCBGs summit, which will be held under the Indian G20 Presidency.

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The summit will be attended by 520 people from 66 delegations in total. Both the Reserve Bank of India Governor, Shaktikanta Das, and Union Finance Minister, Nirmala Sitharaman, will jointly lead the meeting.

The G20 Independent Expert Group’s Volume 1 Report on Strengthening MDBs, developments in the debt treatment for nations covered by the Common Framework, a guidance note for creating a globally coordinated framework for the regulation and supervision of crypto-assets, and recommendations on advancing financial inclusion and productivity gains through digital public infrastructure (DPI) to name a few of the major deliverables that will be given to the Ministers and Governors.

During these challenging times for the global economy, policy cooperation among major economies is crucial to address uncertainties. Ajay Seth, the secretary of economic affairs, said that even if the epidemic is over, “we will also be deliberating on how to be better prepared in case there is another pandemic to come in.”

 

The resulting paper for the consideration of FMCBGs will be the main discussion topic at the Deputies’ meeting. The work completed under the various G20 Finance Track work streams will be presented in this outcome document, and recommendations from the FMCBGs for the next steps.

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On July 17–18, 2023, the gathering will be divided into five theme sessions covering the global economy and health, sustainable finance and infrastructure, international taxation, international financial architecture, and the financial sector and inclusion. Reviewing the findings of the G20 Finance Track and seeking direction from Ministers and Governors on the next steps are the goals of the third G20 FMCBG.

The G20 Independent Expert Group’s Volume 1 Report on Strengthening MDBs, developments in the debt treatment for nations covered by the Common Framework, a guidance note for creating a globally coordinated framework for the regulation and supervision of crypto-assets, and recommendations on advancing financial inclusion and productivity gains through digital public infrastructure (DPI) to name a few of the major deliverables that will be given to the Ministers and Governors.

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Various G20 activities have been scheduled for visiting Ministers, Governors, Deputies, and other delegates during the gathering. These include a High-Level Tax Symposium on “Combatting Tax Evasion, Corruption, and Money Laundering,” an Infrastructure Investors’ Dialogue on “Leveraging Funding and Financing Mechanisms and Approaches for the Cities of Tomorrow,” a Roundtable Discussion on Crypto Assets, a Roundtable on the Report of the G20 Expert Group on Strengthening MDBs, Workshops on “Interlinking Fast Payment Systems (FPS)” and “Achieving Growth-Friendly Climate Action and

The G20 Summit 2023 is underway, and two pivotal issues that have emerged at the forefront of discussions are the looming global debt threats and the increasing influence and ramifications of cryptocurrencies. These two intertwined issues are profoundly important, shaping financial systems worldwide, with possible wide-reaching effects on the global economy. Let’s explore these issues in depth and understand their potential implications.

The spectre of a global debt crisis is not a new concern. However, the COVID-19 pandemic exacerbated the situation, leading to an unprecedented borrowing surge from developed and developing countries. The consequences of these debts are becoming a profound concern, with fears of a potential economic crisis comparable to the 2008 financial meltdown.

Governments worldwide initiated massive spending to cushion their economies from the effects of the pandemic, leaving many nations burdened with significant public debt. As per the International Monetary Fund (IMF), the worldwide public debt hit a record high in 2022, standing at around 98% of the global GDP.

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The ramifications of this borrowing spree are twofold. On the one hand, countries facing high inflation rates may decide to raise interest rates to control price increases, leading to higher debt servicing costs. On the other hand, nations struggling to reboot their economies might face difficulties managing their increased debt, potentially leading to a wave of defaults.

The G20 meeting is anticipated to deliberate on global financial safety nets and innovative debt restructuring mechanisms. Debt transparency, sustainable borrowing practices, and the role of international financial institutions in managing debt distress are other areas likely to feature prominently in the talks.

Another prominent topic on the G20 agenda is the rise of cryptocurrencies. The exponential growth of this digital asset class has raised questions about financial stability, regulation, and monetary control.

Cryptocurrencies are decentralized and borderless, making it challenging for traditional financial systems and regulatory bodies to oversee and control them. The soaring popularity of cryptocurrencies can disrupt monetary policy, jeopardize financial stability, facilitate illicit activities, and increase consumer protection risks.

However, cryptocurrencies also present opportunities. They can improve financial inclusion, provide new tools for monetary policy, and accelerate economic development. Cryptocurrencies and blockchain, the technology underpinning them, can create a more inclusive, efficient, and secure financial system.

G20 leaders are expected to discuss regulatory standards for cryptocurrencies, intending to foster transparency, protect consumers, and ensure financial stability. Regulatory cooperation is crucial as cryptocurrencies’ decentralized and borderless nature can lead to regulatory arbitrage. The introduction of Central Bank Digital Currencies (CBDCs) further complicates the conversation around cryptocurrencies.

The G20 Summit 2023 is becoming a key event in the global economic calendar. The measures and policies proposed at the summit will have significant implications for the future of global economic and financial stability.

The global debt crisis and the rise of cryptocurrencies are critical challenges the world must address. Decisions taken at the G20 could redefine international economic policies, providing a new blueprint for a sustainable and inclusive financial system.

Regardless of the outcomes of this year’s G20, it is clear that these two subjects will remain at the forefront of global economic discourse. The future of the global economy hinges on how these challenges are addressed, setting the stage for a potentially transformative era in international finance.

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