Global economy, crypto regulation, digital public infra — economic issues that G20 leaders agreed on

New Delhi: Taking note of the “cascading crises” that posed challenges to long-term economic growth, the G20 New Delhi Leaders’ Declaration on Saturday laid out measures by which the countries involved would help the private sector accelerate growth, help MSMEs in developing countries to integrate better in global trade, and support skill development and financial inclusion across countries.

Prime Minister Narendra Modi announced that the G20 arrived at a consensus on the language of the New Delhi Declaration, and also declared that the multilateral body had adopted it.  

“Cascading crises have posed challenges to long-term growth,” the declaration said. “Facing an uneven recovery, and cognisant of the need to boost long-term growth, we will implement well calibrated macroeconomic and structural policies.” 

“We will protect the vulnerable, through promoting equitable growth and enhancing macroeconomic and financial stability,” it added. “Such an approach will help resolve the cost-of-living crisis and unlock strong, sustainable, balanced, and inclusive growth.” 

The G20 countries noted that global economic growth was below its long-run average, and that it remained uneven. Notably, the declaration also said that things are likely to look worse in the near future. 

“With notable tightening in global financial conditions, which could worsen debt vulnerabilities, persistent inflation and geoeconomic tensions, the balance of risks remains tilted to the downside,” it noted. 

The declaration also took note of the swift actions taken by some developed economies in light of the banking turmoil in the recent past, and welcomed the steps taken by the Financial Stability Board (FSB), the Standard Setting Bodies (SSBs), and certain jurisdictions to examine what can be learnt from these episodes. 

Significantly for India, which has used its G20 presidency to push for the wider adoption of Digital Public Infrastructure (DPI) to enhance financial inclusion and service delivery, the declaration also made mention of New Delhi’s plans to make available DPI technology for countries that want to adopt such platforms. 

Further, the G20 countries resolved to ensure that the multilateral development banks (MDBs), including the International Monetary Fund (IMF) and the World Bank, were adequately capitalised and ready to help the countries in need. They added that the steps already taken towards this would ensure an additional $200 billion of loans would be available over the next decade. 

The grouping also called for the faster resolution of debt distress among the smaller economies that were  suffering from high-levels of indebtedness following the COVID-19 pandemic, another item on the G20’s agenda that India was prioritising. 

On the regulation of cryptocurrencies, the G20 leaders said they welcomed the synthesis paper by the IMF and the FSB that outlined the risks associated with cryptocurrencies and also laid out a roadmap for the adoption of crypto-related regulations by the member countries. 

They added that the recommendations of the paper would be discussed in the meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG) in October. One of the key recommendations in the paper was that governments should not give cryptocurrencies the status of official currencies or legal tender


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Enhancing digital public infrastructure

The G20 leaders said that they recognised that digital public infrastructure, “respectful of human rights, personal data, privacy and intellectual property rights” can strengthen service delivery and innovation. 

This emphasis on personal data and privacy is of particular importance because, while a lot of developing countries have some keenness to work with India’s DPI portals like the Unified Payments Interface (UPI), Aadhaar, and CoWin, advanced economies have been wary, citing privacy and security concerns.

The declaration said that the leaders welcomed the G20 Framework for Systems of Digital Public Infrastructure, a voluntary and suggested framework for the development, deployment and governance of DPI.

“We welcome India’s plan to build and maintain a Global Digital Public Infrastructure Repository (GDPIR), a virtual repository of DPI, voluntarily shared by G20 members and beyond,” the declaration added.

It also took note of India’s proposal of a ‘One Future Alliance (OFA)’, which it said was a voluntary initiative aimed to build capacity, and provide technical assistance and adequate funding support for implementing DPI in low- and middle-income countries. 

Strengthening multilateral development banks

“The 21st century also requires an international development finance system that is fit for purpose, including for the scale of need and depth of the shocks facing developing countries, in particular the poorest and most vulnerable,” the declaration said. 

“We are working to deliver better, bigger and more effective MDBs by enhancing operating models, improving responsiveness and accessibility, and substantially increasing financing capacity to maximise development impact,” it added.

The leaders endorsed the roadmap for the implementation of the recommendations of the G20 Independent Review of MDBs Capital Adequacy Frameworks (CAFs) — which submitted its report in 2022 under the presidency of Indonesia — and called for its implementation, keeping in mind the MDBs’ own governance frameworks.

“We take note that initial CAF measures, including those under implementation and consideration, could potentially yield additional lending headroom of approximately $200 billion over the next decade, as estimated in the G20 CAF Roadmap,” the declaration said. 

“While these are encouraging first steps, we will need to give an additional push for continued and further impetus on CAF implementation,” it added. 

(Edited by Tony Rai)


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