Randal Quarles, chair of the Financial Stability Board (FSB), said there won’t be a specific item on the agenda about Facebook’s Libra at the G20 summit in Japan, but that regulators will need to closely watch the proposed cryptocurrency, according to a report by Reuters.
Quarles said there is no current global threat from crypto in terms of affecting stability, but that there could be gaps that fall outside the scope of regulators’ power, which need to be scrutinized.
“A wider use of new types of crypto assets for retail payment purposes would warrant close scrutiny by authorities to ensure they are subject to high standards of regulation,” Quarles said. “The FSB and standard-setting bodies will monitor risks very closely and in a coordinated fashion, and consider additional multilateral responses as needed.”
In March of last year, G20 finance ministers and central bankers said they would monitor crypto, but that they wouldn’t take any sort of concrete action. However, the FSB did acknowledge that if Libra is successful, they would have to take a different approach.
The FSB said it met with Facebook about Libra, but the meeting was based on generalities and not about anything too detailed.
A central bank forum in Switzerland, the Bank for International Settlements (BIS), said lawmakers need to come together quickly and coordinate a response to new cryptocurrencies like Libra.
The FSB was instrumental during the financial crisis 10 years ago when governments bailed out lenders; it mostly focuses on ensuring that rules are followed.
One concern is that worldwide capital markets are being separated by national regulators, which is prompting some banks to keep huge amounts of capital locally in case they go under. The FSB called that “prepositioning” and said the topic would be on the agenda. The goal is to find an agreement that ensures banks are comfortable that they have enough capital, but not so much that it affects the worldwide financial market.