The Financial Stability Board (FSB) has released 10 high-level recommendations for regulation, supervision, and oversight of “global stablecoin” in its latest report on Tuesday.
The international body that monitors and makes recommendations about the global financial system says global stablecoins must adhere to all applicable regulatory standards before commencing operation.
While these so-called fiat-backed stablecoins have the potential to “bring efficiencies to payments and to promote financial inclusion,” they may also challenge the existing regulatory oversight and generate risks to financial stability, says the report.
As such, the 10 high-level recommendations have been made that follow the “same business, same risk, same rules” principle.
FSB publishes 10 high-level recommendations for regulation, supervision & oversight of “global #stablecoin” arrangements. Report states that arrangements are expected to adhere to all applicable regulatory standards before commencing operation https://t.co/378HYZ0w80 pic.twitter.com/wBmsbUbqwU
— The FSB (@FinStbBoard) October 13, 2020
To enhance the cross-border payments commissioned by the G20, the FSB has agreed to complete the international standard-setting by December 2021. Necessary adjustments must be made by that time, too, and a framework consistent with the FSB recommendations must be enabled at the national level by July 2022.
The report came the same day the financial officials of the United States, Canada, Japan, Germany, France, Italy, and Britain said digital payments should be “appropriately supervised and regulated.”
Until adequate regulatory, legal, and oversight standards are set, no global stablecoin project should begin operation, said the G7, without explicitly mentioning Facebook’s Libra, which has been the one that pushed them into action.
The officials also called on all countries to implement FATF standards to reduce the exploitation of criminals’ financial services. The emphasis was put on coordinated response through information sharing and economic measures.