CPMI published a report that investigates the impact of global stablecoins. This report by the G7 Working Group on Stablecoins finds that stablecoins, regardless of size, have implications ranging from anti-money laundering efforts across jurisdictions to operational resilience (including for cyber security), consumer or investor and data protection, and tax compliance. Global stablecoins may amplify the challenges and could also pose challenges to competition policy, financial stability, monetary policy and, in the extreme, the international monetary system. The report lays out initial recommendations for private-sector stablecoin developers and for public-sector authorities to address the challenges and risks.
The report provides an overview of the stablecoin ecosystem and the need to improve payment systems and services. It details the regulatory, oversight, and policy issues associated with stablecoin initiatives, highlighting the challenges inherent in global stablecoins. The report also provides a preliminary review of existing regulatory and oversight regimes that may be applicable to stablecoins and sets out the way forward, including improvements to cross-border payments. The G7 Working Group on Stablecoins recommends that relevant public stakeholders, in collaboration with the relevant international organizations, develop roadmaps for supporting and scaling up ongoing efforts to improve the efficiency and inclusiveness of payment and financial services. The roadmaps could include recommendations to:
- Support initiatives to improve cross-border payments
- Promote financial inclusion by reviewing and updating the call for action by all relevant stakeholders and by boosting support programs for less developed countries
- Improve coordination between authorities, both domestically and across borders, including through strong regulatory cooperation and harmonized standards and through information-sharing and cooperative oversight arrangements between relevant authorities
FSB and the standard-setting bodies are intensifying their efforts to assess how the existing principles and standards could be applied to stablecoin arrangements and to develop new policy recommendations for stablecoins in a globally consistent and coordinated manner. Additionally, the Working Group recommends that public-sector authorities continue to underscore regulatory expectations with global stablecoins arrangements. The Working Group welcomes the plans of FSB to work with standard-setting bodies to assess whether there may be regulatory gaps around global stablecoins and to deliver its findings to the G20. Finally, the Working Group recommends that finance ministries, central banks, international organizations, standard-setters, and other public authorities maintain the high level of international coordination and collaboration needed for cross-border policies and regulatory regimes that apply to stablecoins. Public authorities should also be mindful to forestall harmful regulatory arbitrage and to ensure a level playing field that encourages competition.
Related Link: Report
Keywords: International, Banking, Securities, Stablecoins, G7, Cross-border Payments, Recommendations, Financial Stability, Global Stablecoins, CPMI
Previous ArticleESMA and ASIC Sign MoU for Cooperation on Australian Benchmarks
EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.
The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.
EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.
EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.
EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.
MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.