Although more and more actors are calling for joint action at international level on virtual currencies, no specific proposals emerged after two days of meetings of the finance ministers and central bankers of the 20 largest economies of the world (G20) in Buenos Aires on Monday 19 and Tuesday 20 March.
“We have received a strong mandate to put together specific recommendations” at the next meeting in July, Federico Sturzenegger, the President of the Central Bank of Argentina - which currently holds the Presidency of the G20 - told a press conference on Tuesday.
The final press release goes no further than to promise further studies and give its financial watchdog, the Financial Stability Board (FSB), a mandate to continue to monitor the situation and assess whether there is a need for a multilateral response.
The ministers recognise the advantages of the technological innovation underlying virtual currencies, but stress the risks generated, particularly in terms of money laundering and financing of terrorism. The press release also states that “crypto-assets lack the key attributes of sovereign currencies”.
On Monday, Reuters predicted that the G20 would not reach a concrete decision, in the absence of a common strategy and given the opposition in principle of the United States to any new financial rules.
Two positions emerged during the discussions, Sturzenegger explained. One favours regulation and work on cyber-security, the other suggests that in view of these calls, the traditional international payments system should be improved. He believes the two approaches are not mutually exclusive and noted consensus on the need to continue discussions on the matter.
On Twitter, the French finance minister, Bruno Le Maire, welcomed the fact that the subject of crypto-assets had been discussed at the G20 for the first time, by joint request of France and Germany, he stressed.
In a video message, he said that he was pleased to see that the Franco-German proposal had found support from all G20 member states, adding that work would be done on regulating crypto-assets and that this work would be defined jointly in the framework of the G20.
In actual fact, the tone was already set on Sunday, in a letter from the FSB to the G20 participants, concluding that virtual currencies are not currently a risk to global financial stability.
However, the letter went on to say that “the market continues to evolve rapidly and this initial assessment could change if crypto-assets were to become significantly more widely used or interconnected with the core of the regulated financial system”.
A meeting set against the backdrop of commercial and fiscal tension
These discussions took place in an atmosphere marked by the entry into force, barely two days earlier, of the American taxes on imports of steel and aluminium to the United States (see EUROPE 11985).
Several media sources on the ground noted a stand-off between the United States and China during negotiations for the final text of the press release. Sturzenegger, however, reported that discussions had taken place in a spirit of constructiveness and cooperation.
“We did not discuss in international trade war” or customs duty, but the broader context, said the Argentinian Minister for the economy, Nicolás Dujovne.
The final press release, however, reports “vulnerabilities that could be revealed with a faster than expected tightening of financial conditions and heightened economic and geopolitical tensions”, and recognises the need for more dialogue actions.
It is worth noting that the press release also refers to the declaration of Hamburg, in which the G20 pledged to continue to fight protectionism, whilst recognising the legitimacy of trade defence instruments (see EUROPE 11826).
Another controversial issue discussed is the taxation of the digital economy. In a press release, the G20 attendees undertook to work together towards a consensual solution by 2020. This is a particularly topical issue, as the Commission on Wednesday presented its legislative proposal on the taxation of the Internet giants (see article) – which has been interpreted on the other side of the Atlantic as an anti-American tax (see EUROPE 11984).
Welcoming the fact that a consensus could be reached on the need for progress on the subject, Dujovne nonetheless acknowledged that this could be a controversial area. (Original version in French by Marion Fontana)