India, UK discuss developments around cryptoassets, emphasize robust global approach to manage risk

At the India-UK 2nd Financial Markets Dialogue, participants from both countries provided updates on the latest developments in their respective banking sectors, discussing banking trends and emerging vulnerabilities and risks in the sector.

“Opportunity to increase central bank digital currency (CBDC) knowledge through mutual learning was explored. Participants discussed international developments regarding cryptoassets, and the importance of robust global approaches and progress in delivering the G20 Roadmap,” the joint statement said.

The recent collapse of the crypto exchange FTX and the subsequent sell-off in the crypto markets has put the spotlight on the vulnerabilities of the crypto ecosystem.

Crypto-assets are self-referential instruments and strictly speaking do not pass the test of being a financial asset because they have no inherent cash flows associated with them.

US regulators have disqualified Bitcoin, Ether and various other crypto-assets as securities.

Participants discussed matters relating to the insurance sector, including UK updates on Solvency II reforms and a consultation on the introduction of an insurance regulatory regime (IRR), it said.

Indian participants updated on developments in the regulatory approach to insurance in India, in favor of ease of doing business and encouraging new entrants to enter for deeper insurance penetration, it said.

The meeting chaired by Richard Knox, Director of International Financial Services at the Treasury Department, and Surbhi Jain Joint Secretary, Department of Economic Affairs, also explored the possibility of leveraging the asset management industry for deeper cross-border trade and investment.

Participants identified new areas for collaboration, including knowledge exchange on regulatory frameworks for pension funds (PFs) in respective countries, potential investment opportunities from PFs and development of ecosystems including technology-based solutions for Social Stock Exchange, it said.

Both sides discussed the possibility of further technical discussion on effective regulation of ESG rating providers, it said, adding commitment to continue cooperation on opportunities offered by the GIFT IFSC across verticals, including dual listing capital markets, sustainable finance, fund management and re-insurance was repeated.

Sustainable finance was also discussed, including existing cooperation between central banks on climate scenario analysis and stress testing, as well as capacity building and awareness raising on climate risk and sustainable finance.

In addition, opportunities to collaborate around sovereign green bonds will be explored, it says.

“Both sides agreed to engage bilaterally in these areas in the coming months with the government-led Sustainable Finance Forum in June to promote green cooperation followed by Ministerial Economic and Financial Dialogue (EFD) later in the year,” it said.

Following the inter-government discussion, business leaders from the India-UK Financial Partnership (IUKFP) were invited to the discussion, it said.

Both governments welcomed the appointment of Bill Winters CBE, Group CEO of Standard Chartered, as the new Chairman of IUKFP in the UK along with Uday Kotak, Managing Director and CEO Kotak Mahindra Bank, as the India Chairman.

“Financial cooperation is one of the key elements in the roadmap for 2030 which was adopted during the meeting in 2021 with the two Prime Ministers.

“Both countries agreed that there is significant scope for enhanced financial services cooperation between India and the UK and agreed to hold the next Financial Markets Dialogue in India in 2024,” it said.