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UPDATE 1-EU urges more G20 cooperation on monetary, fiscal policy against COVID-19 crisis

Thu, 9th Jul 2020 14:55

(Adds EU views on cryptocurrencies, Libor, money laundering)

BRUSSELS, July 9 (Reuters) - Global powers should cooperate
better on monetary and fiscal policy to tackle the COVID-19
economic crisis, European Union finance ministers and central
bankers will tell their G20 counterparts at a meeting next week.

The group of the world's 20 most industrialised nations
should also aim for a global deal on digital taxation this year
and avoid rolling back planned and ongoing financial regulation
reforms during the pandemic, an EU document seen by Reuters
says.

The document, which is expected to be approved on Friday
after a videoconference of EU finance ministers, represents the
EU position ahead of a meeting of G20 finance ministers and
central bankers on July 18, chaired by Saudi Arabia.

"The G20 should support stronger international cooperation
for defining the necessary monetary, fiscal and structural
reform measures to ensure a safe exit" from the current crisis,
the document says.

It calls on G20 partners to "reconfirm the importance of the
principle of central bank independence worldwide."

It also urges world leaders to "making the most of the green
and digital opportunities in shaping the recovery."

The 27-nation bloc is reiterating in the document its push
for a global deal on a digital tax this year, despite the United
States' withdrawal from talks on the matter.

It also calls on G20 partners to stick to the financial
reform agenda agreed before the pandemic, which includes work on
stablecoins, which are cryptocurrencies with fixed exchange rate
against a normal currency. They caught regulators' attention
when Facebook unveiled last year its Libra project.

Reforms which should also continue include the transition
away from the London Interbank Offered Rate (Libor), which
regulators want to replace after banks were fined for rigging
it. This reform should remain firmly on the G20 agenda, the EU
document says.

Market participants have said that the Bank of England's
Sonia rate which should replace Libor lacks the forward-looking
variants that Libor has, making it harder to switch some
contracts like interest rate swaps.

The fight against money laundering through the financial
system should remain a priority, the EU document says.
(Reporting by Francesco Guarascio; Editing by Toby Chopra)

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