Cryptocurrency

G-20 Urges Unified Stablecoin Framework Ahead Of Facebook’s Libra

G-20 Urges Stablecoin Framework Ahead Of Libra

The Financial Stability Board (FSB) – the regulatory watchdog of the Group of 20 (G-20) – warned global regulators that possible stablecoin disruptions should be addressed before Facebook’s Libra is released, according to a consultation report released on Tuesday (April 14).

The FSB outlined 10 recommendations for global stablecoins (GSC) that provide a unified, global approach to stablecoin supervision. The G-20 mandated in June 2019 that the FSB examine regulatory issues related to GSC.

“If a GSC were used as a common store of value, even a moderate variation in its value might cause significant fluctuations in users’ wealth. Such wealth effects may be sizeable enough to affect spending decisions and economic activity,” according to the report. “If users relied upon a stablecoin to make regular payments, significant operational disruptions could quickly affect real economic activity, e.g. by blocking remittances and other payments.”

The FSB’s recommendations call for regulation that aligns with the risks and emphasizes the importance of “flexible, efficient, inclusive and multi-sectoral cross-border cooperation, coordination and information-sharing arrangements” that also consider how stablecoins could evolve and what the possible risks could be.

The report also outlines important standards from the Basel Committee, the Financial Action Task Force, the Committee of Payments and Market Infrastructures and the International Organization of Securities Commissions.

A report will be delivered to G-20 finance ministers and central bank governors for their virtual meeting on Wednesday (April 15). The public consultation period closes on July 15, with final recommendations to be published in October.

The April G-20 meeting with finance ministers and central bank governors is usually held in Washington, D.C. on the sidelines of the International Monetary Fund and World Bank Group spring meetings.

G-20 leaders said last month that they would infuse $5 trillion into the global economy. The group said it was committed to doing “whatever it takes” to stop the virus’ spread and ensuing effects.

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