Monetary System of Nation-States at Systematic Risk due to Stablecoins, Says FSB

With the introduction of global stablecoin like Facebook’s Libra, G20’s watchdog, the Financial Stability Board has released recommendations opposing stablecoins. Members of G20 have been offered regulatory recommendations by the FSB and the broader international community is preventing the stablecoin projects from using any possibilities for regulatory arbitrage.

The report has also warned that global stablecoins can be systematically essential across jurisdictions, which can undermine the governments’ capacity to release monetary and investment policy within the country.

The report has also identified certain risks associated with the technology used for stablecoins. The warning clarified that the technology and infrastructure for recording transactions, and tracing the coins might open gates for cybersecurity risks.

The FSB urges trans-national cooperation between financial authorities to prevent stablecoins from exploiting ‘regulatory arbitrage’ https://t.co/BSratYsyGa

— Cointelegraph (@Cointelegraph) October 14, 2020

The FSB has urged lawmakers to develop comprehensive regulations before global stablecoins gain traction. It has also recommended national supervisory authorities to collaborate effectively for identifying significant gaps in the domestic frameworks and reducing possibilities for cross-border and cross-sectoral regulatory arbitrage. The report has also notified benefits of stablecoins, including better economic inclusion internationally.