On July 15-16, 2022, the G20 Finance Ministers and Central Bank Governors (FMCBG) attended the 3rd FMCBG Meeting 2022 under Indonesia’s G20 Presidency in the Finance Track, which officially began as a hybrid event in Nusa Dua, Bali, Indonesia.
- This meeting did take place following those in February 2022 (in Jakarta, Indonesia) and April 2022 (Washington, D.C. in the United States).
- The FMCBG meeting was conducted over two days and was preceded by a hybrid Finance & Central Bank Deputies (FCBD) meeting on July 13–14, 2022, also at the same location.
The aim of the G20 FMCBG Meeting 2022 is to facilitate a coordinated global economic recovery in the face of numerous new difficulties.
Dignitaries of the 3rd G20 FMCBG Meeting 2022
The meeting was attended by G20 members, with 407 foreign delegations attending in person and another 120 virtually, invited countries (including Ukraine), and international and regional organizations. In addition, 19 Finance Ministers and 11 Central Bank Governors also attended the meeting in person.
Host of the 3rd G20 FMCBG Meeting 2022 – Mulyani Indrawati, Finance Minister of Indonesia and Perry Warjiyo, Governor of Bank Indonesia.
- The Fourth G20 FMCBG Meeting will be held in October 2022 in Washington DC, USA.
Seven Priority and Legacy Agendas Discussed Within the Financial Track
i.Global economy and risks – A discussion was held regarding the latest global economic dynamics and appropriate policy response to achieve a solid, sustainable, balanced and inclusive global economic recovery in the face of various challenges.
- The challenges included the escalating inflationary pressures, global supply chain disruptions, supply and demand imbalances as well as rise in energy and commodity prices due to the COVID-19 pandemic and ongoing war in Ukraine.
ii.Global health issues – All G20 members and several non-G20 countries along with international organisations have pledged their support and commitment to a multilateral fund.
- This is an effort to revitalise the global health architecture to prepare, prevent and respond to future pandemics.
iii. International financial architecture – The G20 sought ways to improve debt management for poor countries and strengthen long-term global financial resilience.
- It included the efforts to maintain sustainable foreign capital flows, while mitigating the risks posed to capital flow volatility and strengthening the global financial safety net.
iv.Financial sector issues – It discussed policy normalisation (exit) strategies, ways to mitigate the scarring effect in the financial sector, efforts to strengthen the global financial sector through risk management, technology optimisation and digitalisation, as well as the regulation of cross-border payments.
- In addition, the G20 is increasing efforts to promote financial inclusion among vulnerable groups through digitalisation.
v.Sustainable finance – The Indonesia’s G20 Presidency in 2022 focusses on advancing three priority agendas, namely
- Developing a transition finance framework and increasing the credibility of commitments made by financial institutions towards the green economy.
- Enhancing sustainable finance by expanding access to green instruments as well as discussing policy instruments that could provide financing and
- investment incentives to support the transition
vi.Infrastructure development – A discussion was held regarding sustainable, inclusive, accessible and affordable infrastructure. The G20 is also formulating a framework that will expand private sector participation in development of sustainable infrastructure.
vii. International taxation – G20 Finance Ministers and Central Bank Governors have also advanced the international taxation agenda by ensuring implementation of two G20/ Organisation for Economic Co-operation and Development (OECD) pillars as agreed in 2021.
FM Sitharaman Highlights the Need to Enhance the Effectiveness of G20 Common Framework
Nirmala Sitharaman, Union Finance Minister, attended the third session of the International Financial Architecture in Bali, Indonesia.
- She highlighted the need to enhance the effectiveness of the G20 Common Framework while attending the Sustainable Finance for Climate Transition forum.
- She has also reemphasized the necessity for leveraged private financing and blended finance to meet Sustainable Development Goals (SDG).
Highlights
i.Nirmala Sitharaman lauded the Multilateral Development Bank expert panel’s work and recommended creating a roadmap for putting its suggestions into practice.
ii.She discussed India’s two-pronged energy transition plan, which encourages the use of renewable energy sources in the energy mix and adopting innovative policy solutions to improve energy security and efficiency.
iii. Additionally, she took part in the discussion of the G20 FMCBG 2022’s health agenda, which included pandemic preparedness and response strategies.
iv.She demanded the establishment of a global coordinating mechanism with the World Health Organization (WHO) at its core.
v.The Union Finance Minister also met with Canada’s Deputy Prime Minister and Finance Minister, Chrystia Freeland in Bali, Indonesia.
RBI, Bank Indonesia Agree to Expand Cooperation in Payment Systems
The Reserve Bank of India (RBI) and the Bank Indonesia (BI) signed a Memorandum of Understanding (MoU) on July 16, 2022 in Bali, Indonesia, on the sidelines of the G20 FMCBG Meeting 2022 to improve mutual cooperation between the two central banks.
- The MoU was signed by RBI Deputy Governor Michael Debabrata Patra and BI Deputy Governor Dody Budi Waluyo in the presence of RBI Governor Shaktikanta Das and BI Governor Perry Warjiyo.
Significance of the MoU
i.With this MoU, the RBI and BI committed to fostering closer ties and enhancing communication and collaboration in the field of central banking, including payment systems, digital innovation in payment services, and the regulatory and supervisory framework for combating money laundering and terrorism financing (AML-CFT).
- The MoU will be implemented through policy dialogue, technical collaboration, exchange of information and joint work.
ii.The MoU will also serve as a foundation for mutual understanding, the development of efficient payment systems, and the achievement of cross-border payment connectivity.
iii. These initiatives will be executed through
- Regular interaction on recent economic and financial developments and issues
- Technical cooperation through training and joint seminars; and
- Joint work to explore the establishment of cross-border retail payment linkages.
Genesis of G20 (Group of Twenty)
Following the Asian financial crisis, the G20 was established in 1999 to bring together the Finance Ministers and Central Bankers of 20 of the major developed and developing nations.
- It serves as a strategic, multilateral platform connecting the major developed and developing economies in the world.
The G20 is made up of 19 countries and the European Union. The 19 countries are Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, the UK, and the US.
- The 2021 G20 Presidency – Italy
About Republic of Indonesia:
President – Joko Widodo,
Capital – Jakarta
Currency – Indonesian Rupiah (IDR)
