FSB Calls for Streamlined Approach to Regulate Stablecoins Across G20 States
The Financial Stability Board (FSB) has issued recommendations calling for a unified approach to crypto regulations for stablecoins that adequately account for the risks posed by global private payment projects like Facebook’s Libra.
FSB Wary of Regulatory Arbitrage Concerning Stablecoins
According to a report published by the FSB — the financial supervisory body of the G20 — member countries need to revamp their regulatory infrastructure to prevent global stablecoins undermining the monetary stability of major economies. The report will form part of the discussions among finance ministers and central bank governors of G20 member states during a virtual meeting holding on Wednesday (April 15, 2020).
The FSB published 10 recommendations aimed at creating a common international set of standards for regulating stablecoins. Such a unified legal architecture, the FSB hopes will eliminate the patchwork of laws governing stablecoins in different countries which could create regulatory arbitrage — a situation that would weaken the integrity of both sovereign monetary policies.
For the FSB, the unified set of laws for stablecoin regulations should be akin to those already being complied with by businesses that pose similar risk factors. An excerpt from the FSB report reads:
“Relevant authorities should, where necessary, clarify regulatory powers and address potential gaps in their domestic frameworks to adequately address risks posed by global stablecoins.”
As part of its plans, the FSB says the matter of the appropriate legal framework for stablecoins is open for public consultation until mid-July 2020. The G20’s financial supervisory body will issue a final report on stablecoins in October 2020.
Spotlight on Stablecoins as Central Banks Ponder CBDCs
The FSB’s call for robust stablecoin regulations come on the heels of the European Parliament highlighting the need for novel laws for gray areas in the crypto industry — one of which was stablecoins like Libra. Like the FSB, the European Parliament while acknowledging the potential benefits of stablecoins espoused the same rhetoric about risk factors like monetary instability.
The renewed focus on private stablecoins comes at a time when central banks are exploring their own digital currencies. As previously reported by BTCManager, central bank digital currencies (CBDCs) are beginning to gain traction in several countries across the globe.
China is thought to be the clear leader in the race with reports suggesting work on the basic functionalities of the proposed digital yuan already being completed. The pace of development on China’s planned CBDC has seen lawmakers in Japan and government officials in other countries calling for a similar acceleration of their own local plans.