The Financial Stability Board (FSB), a think-tank that provides financial policy recommendations to G20, seeks to address “the challenges facing cross-border payments” by “examining” the use of “global stablecoin arrangements” and central bank digital currencies (CBDCs).
The FSB and other major bodies have in the past raised the urgent need to strengthen the conventional cross-border payment system, which is slow, cumbersome and expensive compared to alternatives such as crypto.
According to its latest improved cross-border payments update, the FSB, which is headed by the Federal Reserve Deputy Director Randal Quarles, presented a roadmap to “fostering the strength of global stable coin agreements”, a process he began exactly one year ago – and hopes to be completed by the next year. summer 2023.
Before the end of this year, the FSB wants member standards bodies to “review and complete their review of existing standards, principles or guidance” on stable coins before the end of this year.
He also wants “national authorities” to “establish or, if necessary, adapt to any existing global stablecoin and stablecoin deal that has the potential to become a global stablecoin” before the end of 2021.
And some form of stablecoin regulation in G20 countries could happen as early as the summer of next year. The FSB has written that it wants national authorities to “establish or […] adjust their frameworks in accordance with FSB recommendations and international standards and guidelines “on stable coins by July 2022 or” as needed depending on the emergence of cross-border transactions [global stablecoin] provisions. “
What the FSB means by “global stable currencies” is currently unclear. Projects such as Telegram‘s TON have been scrapped and FacebookThe once grandiose Libra / Diem plans have been scaled back, with few other projects led by tech giants currently on the horizon.
Fiat-related stablecoins such as the tether (USDT) and the USD coin (USDC) have come under the regulatory limelight of late, having found popularity in the decentralized finance (DeFi) world.
The authors of the update wrote that it was “useful to assess” to what extent global stablecoins could bolster cross-border payments.
The organization also indicated that the world Bank was to “identify and analyze options” for “CBDC access and interconnection that could improve cross-border payments” by the middle of next year.
And before the end of next year, the World Bank and the International Monetary Fund (IMF) should join the Bank for International Settlements (BIS) to pool their knowledge on CBDC interoperability issues. The bodies, the FSB authors wrote, “will organize a conference to share information exchange / encourage collaboration on cross-border payments through (planned) CBDC implementations.”
And from July next year, the agencies will “provide technical assistance to facilitate cross-border use of the CBDC if requested” by G20 member countries.
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