Finance minister Nirmala Sitharaman has flagged risks of cryptocurrencies being misused by unscrupulous elements for money laundering and terror financing, and has called for harnessing technology to effectively regulate them.
Delivering an address at a seminar during the ongoing spring meet of the International Monetary Fund (IMF) in Washington DC, Sitharaman said: “I think regulation using technology is the only answer. Regulation using technology will have to be so adept that it doesn’t remain behind the curve, but be sure that it is on the top of it. And that’s not possible.” She also indicated her support for hammering out a global strategy around regulating cryptocurrencies.
Cryptocurrencies like Bitcoin remain unregulated in India, although a surge in interest in such instruments in recent years has prompted the government to firm up a strategy to regulate them. Nevertheless, the government has announced its decision to tax any income from the transfer of virtual digital assets, such as cryptocurrencies, at 30%.
Sitharaman’s visit to the US began from Monday to attend the spring meetings of the IMF and the World Bank. She is taking part in the meetings of the finance ministers and central bank governors of the G20 nations.
Late Monday, Sitharaman participated in a high-level panel discussion on “Money at a Crossroad” hosted by Kristalina Georgieva, managing director, IMF. “We are at the crossroads around how fast, how far, and in what proportion, but I see this as a one-way street in which Digital Money is going to play a bigger role,” Georgieva said.
For her part, Sitharaman highlighted India’s performance in the digital space in recent years and stressed that the Covid outbreak accelerated the digital adoption rate in India. “If I use 2019 data, the digital adoption rate in India is about 85%,” she added.
FM, IMF MD discuss Ukraine war impact, Sri Lanka crisis
In their bilateral meeting, both Sitharaman and Georgieva raised concerns about the impact of the ongoing Russia-Ukraine conflict on the global economy and the risks from a spurt in energy prices triggered by the war.
Importantly, Sitharaman called for IMF’s support and urgent financial assistance to Sri Lanka, which is encountering its worst economic crisis since 1948 following a depletion of its foreign exchange reserves. To this, the IMF chief assured the finance minister that the multilateral body will continue to actively engage with Sri Lanka and also lauded India’s efforts to help out the island nation in its hours of crisis.
Georgieva referred to an “effective policy mix followed by India that was well targeted” and highlighted the resilience of the country that remains the world’s fastest-growing major economy despite challenges posed by the pandemic, the finance ministry said in a statement. India’s real gross domestic product reversed a record 6.6% slide in the pandemic year of FY21 to record an estimated growth rate of 8.9% in FY22.
Georgieva also appreciated India for its contribution to the capacity development activities of the IMF.
Revealing India’s policy approach in the wake of the pandemic, Sitharaman stressed that the country resorted to major structural reforms on top of an accommodative fiscal stance, with complementary support from the monetary authority, to stage a smart economic recovery. Elevated capital expenditure will continue to remain critical to its bid to spur sustained economic growth, the minister highlighted.
The Budget has raised the Centre’s capital spending to a record Rs 7.5 trillion for FY23 to capitalise on its multiplier effect; in fact, capex will be doubled from the pre-pandemic (FY20) level.
Sitharaman’s meeting with Georgieva was also attended by chief economic advisor Anantha V Nageswaran, first deputy managing director of the IMF Gita Gopinath and Surjit Bhalla, the body’s executive director for India, Bangladesh, Bhutan and Sri Lanka.
Sitharaman meets Lankan FM, promises help
In her bilateral meeting with new Sri Lankan finance minister Ali Sabry, Sitharaman assured him that, “as a close friend and good neighbour, India will try to extend all possible cooperation and assistance to Sri Lanka”.
Separately, Sitharaman met her Indonesian counterpart Sri Mulyani Indrawati and discussed the need for collective focus of the G20 nations on global energy price volatility, inflation pressure and the impact of the geopolitical tensions on the global economy.
In addition to her official engagements with the World Bank, IMF, G20, and the Financial Action Task Force (FATF), the finance minister also attended on Monday an event at the Atlantic Council, a think tank in Washington DC.
