Financial Stability Board to Further Investigate Stablecoin Risks in Developing Economies

According to CoinDesk, the Financial Stability Board (FSB) has announced plans to further investigate the risks and challenges posed by stablecoin arrangements in emerging and developing economies. The FSB, a global monitor for systemic risk in the financial system, made the decision during a meeting in Toronto of its plenary, the sole decision-making body of the standard-setting and advisory organization. A stablecoin is a type of cryptocurrency whose value is pegged to another asset, such as the dollar or gold. The FSB has been a key player in shaping global crypto policy. Last year, in collaboration with the International Monetary Fund, it drafted a joint policy paper on crypto, cautioning against implementing blanket bans to mitigate risks associated with the sector. During last week's meeting, FSB members identified areas in the crypto sector that 'warrant further attention'. The FSB stated, 'In emerging market and developing economies (EMDEs), crypto-assets pose particular challenges for monetary policy and capital flow management. 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.' The regulation of stablecoins has been a contentious issue between the Group of 7 (G7) biggest industrialized nations and the larger G20. These differences remain unresolved, even after the conclusion of a G7 summit in Italy last week.