Financial Stability Board to Extend Its Work on Stablecoin Risks in Emerging and Developing Economies

The Financial Stability Board (FSB), which monitors the global financial system for systemic risk, said it will undertake further work on the challenges posed by stablecoins in emerging and developing economies.

The decision was taken during a meeting in Toronto of the FSB’s plenary, the sole decision-making body of the standard-setting and advisory organization, according to a Friday statement. A stablecoin is a cryptocurrency whose value is pegged to another asset, such as the dollar or gold.

The FSB has been one of the main architects of global crypto policy. Last year, along with the International Monetary Fund, it framed a joint policy paper on crypto, warning against implementing blanket bans to mitigate risks associated with the sector. At last week’s meeting, FSB members discussed areas that “warrant further attention” in the crypto sector.

“In emerging market and developing economies (EMDEs), crypto-assets pose particular challenges for monetary policy and capital flow management,” the FSB said. “Members discussed the challenges posed by the relatively higher levels of adoption and risks of global stablecoin arrangements in EMDEs. The FSB will undertake further work to consider how these challenges can be addressed.”

Stablecoin regulation has been a sticking point between the Group of 7 (G7) biggest industrialized nations and the larger G20. Those differences appear unresolved even as a G7 summit in Italy concluded last week.

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