Speaking of a meeting that took place in Toronto last week, participants of the global financial stability group discussed those sectors of the crypto market that require more attention. The FSB will have to conduct additional efforts on the threats stablecoins present in emerging and developing nations. They will also analyze the implications that stem from developments like the rise of more stablecoins in the crypto industry.
The FSB, which monitors the global financial system threats, stated that it will carry out further analysis of the prospects of stablecoins in EMDEs.
On Friday, FSB’s plenary, which is its main decision-making body, agreed to tackle the problems associated with stablecoins in emerging and developing economies during a meeting in Toronto. Stablecoins are cryptocurrencies anchored with other assets such as the dollar or gold.
The FSB, which is one of the most influential institutions regarding the regulation of cryptocurrencies, produced a policy paper with the IMF last year. This paper has recommended that risks should not be dealt with through the complete prohibition of crypto. During the FSB members’ meeting last week, they also addressed the sectors in the crypto space that require more attention.
As for the monetary policy and capital flow management in emerging markets and developing economies (EMDEs), crypto-assets present particular difficulties, according to the FSB. In their last meeting, members considered that the use of global stablecoins is likely to be higher in EMDEs and the risks related to it. The FSB intends to carry out additional work to tackle these issues and design adequate actions.
The issue of stablecoins’ regulation has been a concern of debate between the G7 major industrialized countries and the broader G20. Nevertheless, such differences have not been addressed even during the G7 summit held in Italy last week. The ongoing debate proves that the regulation of stablecoins requires a collective effort on the international level to promote financial stability and address the challenges that these assets may present in different economies.
