G20 finance ministers are poring over a report from the Financial Stability Board that sets out high-level recommendations for the regulation, supervision and oversight of 'global stablecoin' (GSC) arrangements
Stablecoins are an attempt to address the high volatility of 'traditional' crypto-assets by tying the stablecoin’s value to sovereign currencies. They have the potential to bring efficiencies to payments, and to promote financial inclusion.
However, a widely adopted stablecoin with a potential reach and use across multiple jurisdictions could become systemically important, challenging the effectiveness of existing regulatory standards.
The FSB has agreed on 10 high-level recommendations that promote coordinated regulation, supervision and oversight of global stablecoine arrangements both at the domestic and international level.
Operating on the 'same business, same risk, same rules' principle, the FSB intends to complete international standard-setting work by December 2021, with the rules expected to apply in domestic markets by July 2022.
In a warning shot to Facebook's Libra, the report makes clear that global stablecoin arrangements must adhere to all applicable regulatory standards before commencing operation.