In preparation for the upcoming G20 Finance Ministers and Central Bank Governors meeting in India, Klaas Knot, Chair of the Financial Stability Board (FSB), has highlighted the recent banking turmoil and the FSB's commitment to learning valuable lessons from these events. In a letter addressed to the G20 officials, Knot emphasised the importance of addressing risks associated with crypto-assets and global stablecoin arrangements, as well as providing updates on efforts to tackle climate-related financial risks.
"I am therefore pleased to deliver to the G20 our finalised recommendations for the regulation, supervision, and oversight of both crypto-assets and markets and of global stablecoin (GSC) arrangements," Knot stated. These recommendations aim to establish comprehensive and consistent global regulatory frameworks for these asset classes, ensuring a level playing field and a technology-neutral approach. The publication of these recommendations marks a significant milestone in the FSB's work.
The FSB's recommendations are grounded in the principle of "same activity, same risk, same regulation," emphasising the need for consistent approaches to regulation and supervision across jurisdictions. Knot stressed the urgency of implementing these recommendations globally, stating, "Attention must now turn to full and effective implementation of the recommendations globally." The FSB will conduct a review of member jurisdictions' implementation progress by the end of 2025.
To avoid a fragmented regulatory landscape that could enable crypto-asset activities to gravitate towards less stringent jurisdictions, Knot highlighted the necessity of strengthening cross-border cooperation and information sharing. "We must avoid a globally fragmented system of regulation," he emphasised. Achieving this objective will require close collaboration among international authorities and a shared commitment to robust regulatory standards.
As the G20 Finance Ministers and Central Bank Governors convene, the FSB's reports on crypto-assets, markets, and global stablecoins will serve as essential references. These reports provide a roadmap for addressing risks stemming from open-ended funds and third-party service providers, while also outlining progress made in addressing climate-related financial risks.
Klaas Knot's letter underscores the FSB's dedication to ensuring the stability and integrity of global financial markets. By advocating for comprehensive and consistent regulatory frameworks, the FSB aims to foster a secure and level playing field for crypto-assets and stablecoins. The focus now shifts to the effective implementation of these recommendations, reinforcing international cooperation and minimising regulatory arbitrage.
Klaas Knot, Chair of the Financial Stability Board (FSB), Letter to G20 Finance Ministers and Central Bank Governors, July 11, 2023 https://www.fsb.org/wp-content/uploads/P120723.pdf
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