The Financial Stability Board (FSB), a think tank that makes financial policy recommendations to the G20, wants to solve “cross-border payments challenges” by “exploring” the use of “global stablecoin arrangements” and central bank digital currencies (CBDCs).
The FSB and other key bodies have spoken in the past about the urgent need to strengthen the weakening conventional cross-border payments system, which is slow, cumbersome and costly compared to alternatives such as cryptocurrencies.
In its latest update on improving cross-border payments, the FSB, led by Federal Reserve Deputy Chairman Randal Quarles, laid out a roadmap for “promoting the soundness of global stablecoin arrangements,” a process it began exactly a year ago – and hopes to complete by the summer of 2023.
Before the end of this year, the FSB wants member countries’ standardization bodies to “review and finalize their revision of existing standards, principles or guidelines” on stablecoins.
It also wants “national authorities” to “implement or, if necessary, adapt existing global stablecoins and stablecoin arrangements that have the potential to become a global stablecoin” before the end of 2021.
And some form of stablecoin regulation in G20 countries could come as early as next summer. The FSB wrote that it wants national authorities to “establish or [.] Adapt their frameworks in line with FSB recommendations and international standards and guidance” on stablecoins by July 2022, or “as needed, depending on the emergence of cross-border [global stablecoin] arrangements.”
What exactly the FSB means by “global stablecoins” is currently unclear. Projects like Telegram’s TON have been abandoned and Facebook’s once grand Libra/Diem plans have been scaled back, with few other tech giant-led projects currently on the horizon.
Fiat-linked stablecoins like Tether (USDT) and USD Coin (USDC), however, have recently come under regulatory scrutiny after gaining wide appeal in the world of decentralized finance (DeFi).
The authors of the update wrote that it would be “valuable” to assess the extent to which global stablecoins could support cross-border payments.
The panel also said that the World Bank is expected to identify and analyze “options” for “accessing and linking CBDCs that could enhance 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 join with the Bank for International Settlements (BIS) to pool their minds on CBDC interoperability issues. The bodies, the FSB authors write, will “organize a conference to share information and promote cooperation on cross-border payments across (planned) CBDC implementations.”
And starting next July, the bodies will “provide technical assistance to facilitate the cross-border use of CBDC, if requested by G20 member countries.”