After France deal, India in talks to link UPI with Indonesia’s payment system

India is in talks with Indonesia to link the two countries’ fast payments systems to allow transactions in local currencies, a top Indian official said on Sunday, on the sidelines of the G20 meeting of Finance Ministers and Central Bank Governors (FMCBG). The development was separately confirmed by Indonesian Finance Minister Sri Mulyani Indrawati.

Once this happens, Indonesia will be the third country whose payment system is connected with India’s Unified Payments Interface (UPI), after Singapore and the United Arab Emirates.

“Like UAE, there are talks going on with Indonesia on something similar, real-time settlement and trading in local currencies. It will get done soon,” the Indian official said.

Indonesia is India’s second biggest trading partner in ASEAN region, with trade worth $38.9 billion in the last financial year (2022-23) — a jump of 48 per cent year on year. Trade between the two emerging economic powers has increased nine-fold since 2005-06.

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Speaking on various G20 agenda items, the official said that India may place a ‘guidance note’ on crypto assets in the current FMCBG meeting as a synthesis paper by the International Monetary Fund and Financial Stability Board is delayed.

The IMF-FSB paper is expected to provide a framework for global regulation of cryptocurrencies and other digital assets.

The official said that the paper is likely to be circulated before the Leaders Meeting in September, giving the heads of states time to arrive at a consensus.

The person also said that on the issue of debt distress of low and middle-income nations, the response from China, the largest bilateral lender, has not been encouraging so far.

“China is of the view that it can deal with borrower nations on a case-by-case basis, without the interference of IMF and World Bank,” the official said.

However, India and most of the G20 members are of the view that when it comes to a common framework for debt resolution, there cannot be a ‘one size fits all’ approach for nations as diverse as Suriname, Ghana, Zambia and Sri Lanka.

As a result of the pandemic and then the geopolitical disturbances due to the war in Europe, over half of all low-income countries are near or in debt distress, double the share of countries that faced such a situation in 2015.

The official also said that while the stand-off between G7 nations and Russia-China — over the language of criticism of the war in Ukraine — may impact the drafting of the Leaders’ Statement and the official communique at the FMCBG, it has not interfered with discussions on the key agenda items at any of the G20 Finance Track meetings.