The ECB President Mario Draghi, in a letter to Markus Ferber, a Member of the European Parliament, provided an overview of the work of the European System of Central Banks (ESCB) in assessing the potential risks of stablecoin initiatives to financial stability and operational and cyber resilience. ESCB is closely monitoring innovation in the financial sector, including stablecoin projects such as Libra, said Mr. Draghi. Central banks in the ESCB are also contributing to the ongoing work of the G7 working group on stablecoins, which is chaired by the ECB Executive Board member Benoît Cœuré in his capacity as Chair of the BIS Committee on Payments and Market Infrastructures.
As large technology or financial firms could leverage vast existing customer bases to rapidly achieve a global footprint, it is imperative that authorities be vigilant in assessing risks and implications for the global financial system. Stablecoin initiatives must ensure public trust by meeting the highest regulatory standards and be subject to prudent supervision and oversight. From a regulatory perspective, stablecoins, like any other emerging financial product, should be subject to the “same business, same risks, same rules” principle based on a comprehensive assessment of their functionalities, said Mr. Draghi in his letter. Technology-neutral regulation not only prevents regulatory arbitrage but also helps avoid the risk of inadvertently constraining technological development. To ensure a level playing field, the ESCB intends to pursue an internationally consistent approach together with the global central bank community and standard-setting bodies.
Related Link: ECB Letter (PDF)
Keywords: Europe, EU, Banking, Stablecoin, Libra, Cryptocurrencies, Financial Stability, ECB
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.