The Financial Stability Board (FSB) published a progress report on implementation of its high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements. The report discusses key market and regulatory developments since the publication of the recommendations in October 2020 and takes stock of the implementation of the recommendations across jurisdictions. The report also describes the status of existing standard-setting body frameworks, standards, guidelines, and principles in light of the recommendations and concludes with an identification of the consideration areas for further international work.
The report takes stock of the implementation of the high-level recommendations in 48 FSB jurisdictions, covering 21 advanced economies and 27 emerging market and developing economies. The report notes that the market capitalization of existing stablecoins has continued to grow during 2020-21. However, the implementation of the FSB high-level recommendations across jurisdictions is still at an early stage. Jurisdictions have taken, or are considering, different approaches toward implementing the recommendations. The report notes that standard-setting bodies—including the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), and the International Organization of Securities Commissions (IOSCO)—are assessing whether and how existing international standards and principles may apply to stablecoin arrangements and, where appropriate, are adjusting them in the light of the recommendations.
The report emphasizes that a number of issues may not be fully covered by ongoing work and that any gaps in existing standards and principles should be addressed holistically, with coordination across sectors. Authorities have identified several issues with respect to the implementation of the recommendations and further work at the international level could be useful in the identified areas; these include conditions for qualifying a stablecoin as a “global stablecoin”; prudential, investor protection, and other requirements for issuers, custodians, and providers of other global stablecoin functions; redemption rights; cross-border and cross-sectoral cooperation and coordination; and mutual recognition and deference. Further work on these issues at the international level may help to support effective implementation of the recommendations at the jurisdictional level, to mitigate the risk of regulatory fragmentation and arbitrage and to address risks to financial stability arising from global stablecoins. The work on fostering the soundness of global stablecoins is an important part of the FSB roadmap for enhancing cross-border payments endorsed by the G20 in October 2020. FSB plans to review its recommendations, in consultation with the other relevant standard-setting bodies and international organizations, by July 2023; the review, will identify ways to address gaps could be addressed in existing frameworks and will lead to an update of the FSB recommendations, if needed.
Keywords: International, Banking, Securities, Crypto Assets, G20, Stablecoins, Digital Currency, Progress Report, FSB
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