- The FSB has been working on crypto-related researches for a while now
- FSB chairperson Andrew Bailey has acknowledged the increasing interest in stablecoins
- The current valuation of the stablecoin market stands at over $240 billion
The Financial Security Board (FSB) is set to intensify discussions around stablecoins at the upcoming meeting of the G20 group in Durban, South Africa. The Basel, Switzerland-based international financial organisation was created in 2009 to oversee recommendations about the global financial systems.
On July 14, FSB chief Andrew Bailey wrote to the finance ministers and central bank governors that are set to attend the G20 meeting later this week, outlining key topics that will be prioritised during the discussions. The aim is to address risks that may challenge global financial stability.
FSB’s stablecoin agenda
Stablecoins are crypto assets that derive their value from the reserved assets like fiat currencies that they are pegged to. These assets maintain a 1:1 ratio with the assets they are tied to – which keeps them safeguarded against extreme market volatility. According to the Forbes tracker, the stablecoin market cap stood at $240.54 billion as of Tuesday, May 15 with Tether (USDT) and USDC being the top two stablecoins.
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The FSB has taken notice of the increasing interest in stablecoins, especially from institutional investors, and has now decided to assess the role these assets could play in the payment and settlement ecosystems.
“This is another key area that I believe deserves further attention as the potential risks and impacts are under explored, in part due to the pace of market developments,” Bailey said in his letter. “We should continue to ensure that we are implementing our agreed recommendations, monitoring developments in this area and collaborating across jurisdictions and with the standard-setting bodies where relevant.”
Crypto under G20 spotlight
Over the last two years, topics around crypto have emerged as priority subjects at the annual G20 meetings. Creating a uniform international legislative framework to oversee crypto is among top agendas, first pinned by India as the G20 President in 2023.
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Türkiye, the UK, the US, as well as the EU together form the G20 group. These economies collectively represent 85 percent of the global GDP, 75 percent of international trade, and two-thirds of the world’s total population, the G20 group claims.
Bailey called for international cooperation in opening discussions around global financial developments stating that, “jurisdictions cannot achieve financial stability alone. A globally interconnected system requires global cooperation and engagement.”
In October last year, the FSB also collaborated with Bank of International Settlements (BIS) to share insights and analyses on the benefits and risks of asset tokenisation.