Featured Product

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    September 16, 2019

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies. The conference included participation from senior officials from public authorities worldwide and presentations by Fnality International, the Libra Association, and JP Morgan. The event was convened by the Group of Seven (G7) working group on stablecoins and was chaired by the CPMI Chair Benoît Cœuré. While speaking at a conference in Luxembourg, Mr. Benoît Cœuré highlighted that G7 working group is expected to provide policy recommendations to G7 Ministers and Governors by the time of the IMF-World Bank Annual Meetings in October this year. Meanwhile, FSB has also started looking into the regulatory implications of these initiatives.

    Earlier, at a meeting in France in July 2019, the CPMI Chair Benoît Cœuré had provided an update on the work of the G7 working group on stablecoins. He had highlighted that the G7 working group has discussed stablecoin initiatives and identified some key considerations that set a baseline for critical issues to be solved. These comprise only a subset of the considerations necessary to address the full range of public policy priorities:

    • Stablecoin initiatives must ensure public trust by meeting the highest regulatory standards and be subject to prudent supervision and oversight. This starts with (but is not limited to) all relevant guidance from the Financial Action Task Force, as well as the Principles for Financial Market Infrastructures (PFMI) issued by the CPMI and IOSCO. Regulatory approaches have to be globally consistent and any gap or inconsistency should be identified and addressed.
    • Stablecoin initiatives should demonstrate a sound legal basis, in all relevant jurisdictions, to ensure adequate protection and guarantees to all stakeholders and users. At a minimum, issuers of stablecoins should clearly explain the nature of the commitment they are making to the holders of their coins and any risks involved in owning such assets.
    • The governance and risk management framework should ensure operational and cyber resilience.
    • The management of the assets underlying the arrangement must be safe, prudent, transparent, and consistent with the nature of obligations to, or reasonable expectations of, coinholders in an effort to ensure broad market integrity and coinholder confidence in good times and in bad times.

    Moreover, stablecoins may raise broader issues for the international monetary system, in particular if they become a widespread substitute for cash and deposits in some economies. Significant work by stablecoin developers and further engagement with the public and authorities will be required before they can expect approval by relevant authorities, as the above considerations can only be adequately addressed by ensuring transparency and making more detailed information available for proper assessment. The working group stands ready to take forward its work in coordination with G7 finance ministries, relevant standard-setting bodies, G20, and FSB.


    Related Links

    Keywords: International, Basel, Banking, Securities, Stablecoins, Digital Currencies, Cryptocurrency, Fintech, G20, Benoit Coeure, BIS

    Related Articles
    News

    FSB Publishes List of Global Systemically Important Banks for 2019

    FSB published the 2019 list of global systemically important banks (G-SIBs), using the end-2018 data and an assessment methodology designed by BCBS.

    November 22, 2019 WebPage Regulatory News
    News

    EBA Publishes Roadmap on Risk Reduction Measures Package

    EBA published a set of roadmaps outlining the approach and timelines for delivering the mandates stemming from the Risk Reduction Measures Package adopted by the European Council and European Parliament on May 20, 2019.

    November 21, 2019 WebPage Regulatory News
    News

    EBA Consults on Initial Reporting Requirements for Market Risk

    EBA launched a consultation on the implementing technical standards on supervisory reporting requirements for market risk.

    November 21, 2019 WebPage Regulatory News
    News

    FED Proposes to Extend Initial Compliance Dates Under SCCL Rule

    FED published a proposal to extend, by 18 months, the initial compliance dates for foreign banks subject to the single-counterparty credit limit (SCCL) rule.

    November 20, 2019 WebPage Regulatory News
    News

    CBIRC to Strengthen Supervisory and Policy Support for SME Services

    CBIRC released a notification on strengthening supervision and guidance to enhance the quality and efficiency of financial services for "small and micro-enterprises" (SMEs).

    November 20, 2019 WebPage Regulatory News
    News

    FED Adopts Proposal to Implement Reporting Form for SCCL

    FED adopted a proposal to implement the Single-Counterparty Credit Limits (SCCL) reporting form FR 2590.

    November 20, 2019 WebPage Regulatory News
    News

    APRA Publishes Approach to Regulating and Supervising GCRA Risks

    APRA published an information paper that sets out a more intensive regulatory approach to transform governance, culture, remuneration, and accountability (GCRA) practices across the prudentially regulated financial sector.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Update Rule on Derivative Contracts Exposure Calculation

    US Agencies (FDIC, FED, and OCC) announced a final rule updating the way certain banking organizations are required to measure counterparty credit risk for derivative contracts under their regulatory capital rules.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Amend Treatment of HVCRE Exposures

    US Agencies (FDIC, FED, and OCC) finalized a rule to modify the treatment of high volatility commercial real estate (HVCRE) exposures, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Changes to Rule on Supplementary Leverage Ratio

    US Agencies (FDIC, FED, and OCC) finalized changes to the capital requirement for banking organizations predominantly engaged in custodial activities, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act.

    November 19, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4177