CPMI and IOSCO Consult on Guidance on Stablecoin Arrangements
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) are consulting on the preliminary guidance that clarifies that stablecoin arrangements should observe international standards for payment, clearing, and settlement systems. The consultative report contains guidance on the application of the Principles for Financial Market Infrastructures (PFMI) to systemically important stablecoin arrangements. Regulators seek feedback, by December 01, 2021, on the consultative report in general as well as on the questions set out in the report. The standard-setters acknowledge that some issues identified in this report may require further clarification and follow-up work in 2022 and beyond, as the features of certain projects and stablecoin arrangement functions evolve.
Stablecoin arrangements may present some notable and novel features, which relate to the potential use of settlement assets that are neither central bank money nor commercial bank money and carry additional financial risk; the novel features also relate to, the interdependencies between multiple stablecoin arrangements functions, the degree of decentralization of operations and/or governance, and a potential large-scale deployment of emerging technologies such as the distributed ledger technology. This report proposes guidance on the application of the PFMI with respect to these features of stablecoin arrangements, which should help stablecoin arrangements and relevant authorities in applying the PFMI to systemically important stablecoin arrangements. The guidance covers issues related to governance, comprehensive risk management, settlement finality, and money settlements:
- When seeking to observe this principle of governance, a systemically important stablecoin arrangements should consider how the stablecoin arrangements' ownership structure and operation allow for clear and direct lines of responsibility and accountability.
- A systemically important stablecoin arrangement should develop appropriate risk-management frameworks and tools and should identify and implement appropriate mitigants, taking an integrated and comprehensive view of its risks.
- A systemically important stablecoin arrangement should provide clear and final settlement, regardless of the operational settlement method used; it should clearly define the point at which a transfer on the ledger becomes irrevocable and technical settlement happens and make it transparent whether and to what extent there could be a misalignment between technical settlement and legal finality.
- A stablecoin used by a systemically important stablecoin arrangement for money settlements should have little or no credit or liquidity risk. In assessing the risk presented by the stablecoin, the stablecoin arrangement should consider whether the stablecoin provides its holders with a direct legal claim on the issuer and/or claim on, title to or interest in the underlying reserve assets for timely convertibility at par into other liquid assets such as claims on a central bank. It should also consider whether the stablecoin has a clear and robust process for fulfilling holders’ claims in both normal and stressed times.
This report is not intended to create additional standards for stablecoin arrangements but rather to provide more clarity to systemically important stablecoin arrangements and relevant authorities as those stablecoin arrangements seek to observe the PFMI. CPMI and IOSCO may further examine regulatory, supervisory, and oversight issues associated with stablecoin arrangements and, as appropriate, coordinate with other standard-setting bodies to address the outstanding gaps. CPMI and IOSCO believe that guidance on the application of the PFMI with respect to these features of stablecoin arrangements is useful for stablecoin arrangements and relevant authorities in applying the PFMI to systemically important stablecoin arrangements. The guidance focuses on a subset of the PFMI for which the CPMI and IOSCO consider that guidance is warranted in light of notable features of stablecoin arrangements as compared to existing financial market infrastructures. This guidance should be read in conjunction with the relevant principles, key considerations, and explanatory notes of the PFMI as well as with the further considerations provided in Section 3. This report is a key contribution to the G20 roadmap on cross-border payments and supports the FSB work in this area.
Related Links
Comment Due Date: December 01, 2021
Keywords: International, Banking, Stablecoin, Fintech, Regtech, Governance, PFMI, FMI, Cross-Border Payments, G20, Operational Risk, Systemic Risk, CPMI, IOSCO
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
APRA Updates Loan Serviceability Expectations for Home LendingNext Article
IFSB Publishes FAQs on Islamic Finance StandardsRelated Articles
CFPB Finalizes Rule on Small Business Lending Data Collection
The Consumer Financial Protection Bureau (CFPB) published a final rule that sets out data collection requirements on small business lending, under section 1071 of the Dodd-Frank Act.
BCBS to Consult on Pillar 3 Climate Risk Disclosures by End of 2023
The Bank for International Settlements (BIS) published a summary of the recent Basel Committee (BCBS) meetings.
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
US Congress Report Examines Data Privacy and Cybersecurity Regulations
The U.S. Congressional Research Service published a report on banking, data privacy, and cybersecurity regulation.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
EU to Conduct One-Off Scenario Analysis to Assess Transition Risk
The European authorities recently made multiple announcements that impact the banking sector.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.