The FSB fears that stablecoins will compromise countries’ financial systems.
The organization recommends tight regulation for stablecoins.
The Financial Stability Board (FSB), an international body created by the G20, sees potential risk in the massive adoption of stablecoins or currencies anchored to the value of fiat currencies. This is how the organization establishes it in its report the regulation, supervision, and inspection of «Global Stablecoins Agreements», published recently.
For the FSB, a “global stablecoin” is one “with potential reach and adoption in multiple jurisdictions and the ability to achieve substantial volume.” According to the organization, the current risks associated with the use of these types of currencies are few. In particular, this is due to a “relatively small scale” and “limited use cases” for stablecoins today.
The report states that the use of stablecoins as a type of payment or a store of value “could increase significantly in the future, possibly on a large scale and in multiple jurisdictions.” And in that scenario, any risk analysis could change, adds the FSB.
Among the main threats, the organization considered that a wide use of stablecoins as a store of value would expose its users to risks in the event of fluctuations in the value of the currency, by variations that could happen in the underlying assets of the stablecoin. Other arguments are that “Even a moderate variation in its value can cause significant fluctuations in the wealth of users”.
These negative effects would have a greater influence in economies that are trying to emerge, where the use of stablecoins as a store of value is friendlier.
The agency states that the risk is extensive, and even includes infrastructure problems, as sustained use of these digital currencies for payments of all kinds “could test the capacity of the support infrastructure to handle high volumes of transactions and the financing conditions of the financial system in general.”
FSB Recommendations about Stablecoins
The FSB document contemplates a series of recommendations for governments, in terms of regulation, supervision, and even surveillance on the use of stablecoins with potentially global reach.
Among these recommendations, it is worth mentioning the call to the authorities to “apply complete requirements for regulation, supervision, and surveillance” for the use of these currencies in their jurisdictions, in addition to complying with international regulations and maintaining broad cooperation between nations “to guarantee regulatory integral”.
Recently, the world’s attention to stablecoins has been on the rise. The European Central Bank, a member of the FSB, came to consider that these currencies could even represent competition for the digital euro, a version of the central bank digital currency region (CBDC), one of the trends that central authorities have pursued around the world.
The FSB has more than 20 members, including countries and organizations. In addition to the European Central Bank, the list includes the International Monetary Fund and the World Bank. Among its member countries, some with clear approaches to the creation of their CBDCs stand out, such as China, which recently accelerated the development of its digital yuan, the United States, whose digital version of the dollar is also in the works, and Brazil, in the Latin American region.
By: Jenson Nuñez.
