Aurelia Butler

(Reuters) – The Group of 20 (G20) big economies is exploring whether the group could collectively regulate cryptocurrencies, Finance Minister Nirmala Sitharaman said on Saturday.Given the sophisticated technologies involved with these virtual assets, countries must discuss whether a given regulation is needed, said Sitharaman, whose country is this year’s G20 president.Prime Minister Narendra Modi’s government has for several years debated drafting a law to regulate or even ban cryptocurrencies but has not made a final decision.”We are talking to all nations, that if it requires regulation, then one country alone cannot do anything,” Sitharaman told reporters after meeting the central bank’s directors in New Delhi.”We are talking with all nations, if we can make some standard operating procedure which is followed by everyone to make a regulatory framework, and if it can be effective.India will host G20 finance ministers and central bank governors this month.Last year, Modi has said a collective global effort is needed to deal with problems posed by cryptocurrencies. The Reserve Bank of India has said that cryptocurrencies should be banned as they are akin to a Ponzi scheme. More

From July 1, banks must classify assets beyond the currently required loans – including bond investment, interbank lending and off-balance-sheet assets – into five categories ranging from “normal” to “loss”, according to rules published by the central bank and the banking and insurance regulator.The rules will help “commercial banks evaluate credit risks more accurately and reflect the true quality of their financial assets,” said the People’s Bank of China and the China Banking and Insurance Regulatory Commission (CBIRC).Current rules are inadequate because “in recent years, the asset structure of China’s commercial banks has changed quite a lot, and risk classification faces many new situations and problems,” the CBIRC said. The new rules, it said, will help prevent credit risks more effectively, the regulator said.The rules will apply to banks’ new business. They have until the end of 2025 to reclassify existing financial assets.The authorities had already urged banks to step up lending and bond purchases to support recovery in the world’s second-biggest economy, after a surge in COVID-19 infections and problems in the vast property sector. New bank loans jumped more than expected in January to a record 4.9 trillion yuan ($720 billion).Saturday’s rules urge banks to scrutinise the underlying assets when they classify risks for asset management or securitisation products.Lenders will also be required to strictly abide by the rules when assessing credit risks in debt restructurings. An increasing number of property developers face restructuring as they struggle to meet repayment obligations.Commercial banks should perform risk classification of all financial assets at least once a quarter, and they must “strengthen the monitoring, analysis and early warning” of the risks, and take preventive measures in a timely manner, the rules say. More

(Reuters) – Risks over El Salvador’s embrace of bitcoin “have not materialized,” but use of the cryptocurrency still requires transparency and attention, the International Monetary Fund (IMF) said Friday in a statement after a visit to the Central American country. “Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin,” the IMF said in a statement.The annual visit by IMF staff followed a $600 million bond payment by El Salvador last month amid investor concerns over its financing sources and fiscal policy. The IMF’s so-called “article IV” visit has been sharply critical in the past. El Salvador’s move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing.While the lender noted that risks “have not materialized due to the limited bitcoin use so far,” it said the cryptocurrency’s “use could grow given its legal tender status and new legislative reforms to encourage the use of crypto assets, including tokenized bonds.”El Salvador’s Congress last month passed a law regulating the issuance of digital assets by both the state and private entities.President Nayib Bukele announced on Twitter a series of purchases of some 2,380 bitcoin before mid November, when he said the Treasury would buy a bitcoin every day.If those purchases were made, the government holds nearly 2,470 coins acquired for about $106.4 million. The current value of that investment is $52.2 million, for a paper loss over 50%.The numbers are Reuters estimates, as the government does not officially disclose purchases, holdings or where the coins are kept.”Greater transparency over the government’s transactions in bitcoin and the financial situation of the state-owned bitcoin-wallet (Chivo) remains essential,” the IMF said.The IMF highlighted the “full recovery” of El Salvador’s economy to pre-pandemic levels, “driven by the effective government response to the health crisis.” Real GDP is projected to grow by 2.4 percent in 2023, the IMF said, above the historical average.However, the lender also expressed concern over a rising current account deficit and the possible spillover effects of a recession in the United States. More