FSB Chair wrote a letter outlining a schedule to G20 and central bank governors for recommendations about regulating stablecoins

On Feb 19, the Financial Stability Board (FSB) Chair Randal K. Quarles, wrote a letter outlining a schedule for recommendations about regulating stablecoins. It treats stablecoins as part of the cross border payments challenge.

Chair Randal K. Quarles

The letter was addressed to the Finance Ministers of the G20 and central bank governors.

The FSB letter also talks about a public consultation to address the regulatory issues of stablecoins in April. But its final output will be a “roadmap for enhancing cross-border payments, with practical steps and indicative timeframes”.

The end result doesn’t explicitly mention stablecoins. From a central banker perspective, if cross border payments were to become quicker, cheaper and easier, the use case for stablecoins would be narrower. However, unless constrained, stablecoins are likely to develop faster than any co-ordinated government efforts.

According to letter said:

Cross-border payment systems and so-called ‘stablecoins’ are closely linked. Digital tokens that aim to be payment substitutes have the potential to become globally systemic, not least because they may fill needs not met by existing cross-border payment systems. Recognizing the importance of efficient and inclusive payment services for global growth, the Saudi G20 Presidency has requested the FSB to coordinate the development of a roadmap for improving cross-border payment systems.

The FSB Chair resolved to speed up the pace of response. He said the review of regulative and supervisory approaches was complete and a dedicated working group aims to come up with solutions to address the risks of stablecoins while still preserving benefits.

As can be seen from the schedule, Quarles concludes that cross border payment issues and stablecoins are closely linked. “Digital tokens that aim to be payment substitutes have the potential to become globally systemic, not least because they may fill needs not met by existing cross-border payment systems,” wrote the FSB Chair.

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