G20 financial regulators send letter to world leaders: Stablecoins need close attention.

News Source: Reuters Authors: Marc Jones and Phoebe Seers Translation: Kaozai

The G20's financial risk regulators warned world leaders on the eve of the South Africa summit that the booming private credit market and stablecoins deserve close monitoring.

In a letter to G20 leaders released Thursday, Financial Stability Board (FSB) Chairman Andrew Bailey called for global collaboration to “modernize and strengthen” financial regulation without compromising financial stability. The letter highlighted the growing role of non-bank financial intermediaries, including the private credit market, and stated that this will be one of the FSB’s key priorities next year. The letter specifically emphasized the “urgency” of improving cross-border payments and establishing a “robust framework” for stablecoins, cryptocurrencies that are typically pegged 1:1 to a real-world currency or asset such as the US dollar. Bailey wrote in the letter: “Differences in regulatory and prudential frameworks among countries could add additional complexity and potential risks.” "Equally important, we must consider how stablecoins can operate effectively and securely across borders." News Source: Reuters Authors: Marc Jones and Phoebe Seers Translation: Kaozai Policymakers outside the United States are generally concerned that widespread adoption of dollar-backed stablecoins could lead to the partial "dollarization" of their economies, thereby weakening their monetary policy power and creating thorny problems should bailout measures be needed in the future. Bailey also noted in his letter that major economies have failed to implement global banking standards, including Basel III. The Basel Committee on Banking Supervision reiterated on Wednesday that the "full and consistent" implementation of stricter capital rules remains its "highest priority." These reforms, agreed upon in 2017, were originally intended as a final measure to address the 2008 financial crisis, but both the European Commission and the UK have postponed the implementation of Basel 3.1 until 2027. The Basel Committee, awaiting a clear stance from the United States, which had previously resisted the plan, appears to be softening a specific aspect of its rules in the face of pressure from various quarters. Basel Committee Chairman Erik Thedéen told the Financial Times on Wednesday that given the “dramatic” rise of stablecoins since the rules were reached three years ago, it is necessary to re-examine the risk exposure requirements for crypto assets. The crypto asset regulatory framework was originally scheduled to take effect on January 1, but so far, neither the United States nor the United Kingdom has committed to adhering to that date.