Global Stablecoins Need Governing Body, Says IMF, FSB
The IMF and FSB have released a report commissioned by the G20 under India’s leadership, outlining a framework for regulating crypto-assets like Bitcoin and stablecoins, arguing that their rapid growth could undermine monetary policy, increase fiscal risks, and reduce capital flow management measures.
Widespread adoption may also amplify financial stability risks by increasing volatility interconnections and speeding up shock transmission across the global financial system. The report specifically mentions stablecoins as a “significant risk,” stating that “Global Stablecoins (GSCs) may transmit volatility more abruptly than other crypto-assets and may cause significant risk to financial stability… These risks may arise, in particular, if households and businesses in some economies begin to hold significant portions of their wealth in GSCs rather than local currencies over time.”
GSCs are stablecoins that have “potential reach and adoption across multiple jurisdictions.” According to the report, “macroeconomic risks associated with GSCs may be higher than those associated with other stablecoins.”
The IMF and FSB propose a comprehensive policy to address macroeconomic and financial stability risks, including strengthening monetary frameworks, addressing fiscal risks, implementing anti-money laundering standards, and enacting comprehensive crypto-asset regulation, potentially transforming the regulatory landscape for cryptocurrencies and stablecoins.
(With inputs from Shikha Singh)
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