The Financial Stability Board (Financial Stability Board, FSB), a think tank that formulates financial policy recommendations for the G20, seeks to address “difficulties with cross-border payments” by “examining” the use of “global stablecoin agreements” and central bank digital currencies (CBDCs).
The FSB and other international organizations have mentioned in the past the need to strengthen the conventional system of cross-border payments, which is too slow, cumbersome and expensive compared to other solutions such as cryptocurrencies.
In its latest update on improving cross-border payments, the FSB, which is headed by the Deputy Director of the Federal Reserve, Randal Quarles, set out a roadmap to “encourage the strength of global stablecoin deals,” a process that began exactly one year ago and that he hopes to complete by summer 2023.
Before the end of the year, the FSB wants member bodies to “review and complete the revision of existing standards, principles or guidance” on stablecoins.
He also wants “national authorities” “to establish or, where appropriate, adapt any existing stablecoin with the potential to operate globally” before the end of 2021.
And some form of stablecoin regulation in G20 countries could see the light of day as early as next summer. The FSB has written that it wants national authorities to “establish or […] adapt their frameworks in accordance with FSB recommendations and international standards and guidelines “by July 2022 or” if necessary, depending on the emergence of cross-border agreements [sur des stablecoins d’ampleur mondiale]”.
The definition of “global stablecoins” is unclear at this time. Projects such as TON from Telegram were abandoned and the once grandiose plans of Facebook for Libra / Diem have been revised, and few projects are currently being led by tech giants.
Stablecoins backed by fiat currencies, such as Tether (USDT) and USD coin (USDC), have been in the regulatory limelight of late, following their popularity in the world of decentralized finance (DeFi ).
The authors wrote that it was “useful to assess” the extent to which global stablecoins could support cross-border payments.
The body also said the World Bank should “identify and analyze options” for “accessing and interconnecting CBDCs to 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 team up with the Bank for International Settlements (BRI) to pool their knowledge on issues related to the interoperability of CBDCs. The bodies, write the authors of the FSB, “will organize a conference for the exchange of information and collaboration on cross-border payments between the CBDCs (whose implementation is planned)”.
And from July next year, these organizations “will provide technical assistance to facilitate cross-border use of CBDCs if G20 member countries so request.”
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