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Global Stablecoins take the limelight at the G20 Riyadh 2020
PAR002_123 • Feb 25, 2020
Global Stablecoins take the limelight at the G20 Riyadh 2020
Global Stablecoins took the limelight at the G20 Riyadh 2020. Finance ministers and governors of central banks of the ‘Group of 20’ have once again reiterated the need to implement the Financial Action Task Force (FATF) guidelines on Global Stablecoins and released a communique after their meeting this past weekend. In their Feb. 23 statement, the G20 finance ministers and central bank governors wrote:
- "We welcome the recent progress made on addressing the tax challenges arising from the digitalisation of the economy. We stress the importance of the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting agreeing on the key policy features of a global and consensus-based solution by July 2020, which would form the basis of a political agreement."
- "We reiterate our statement in October 2019 regarding the so-called ‘global stablecoins’ and other similar arrangements that such risks need to be evaluated and appropriately addressed before they commence operation, and support the Financial Stability Board’s efforts to develop regulatory recommendations with respect to these arrangement."
- "We urge countries to implement the recently adopted Financial Action Task Force (FATF) standards on virtual assets and related providers."
The G20 is expecting reports on cryptocurrencies and stablecoins from a few global standard-setting bodies, including the Financial Stability Board (FSB), the International Monetary Fund (IMF), and the FATF.
- We look forward to the consultation report from the FSB on addressing regulatory issues of so-called ‘global stablecoins’ – April 2020, a report from the IMF on the macroeconomic implications including monetary sovereignty in its member countries – July 2020, and a report from the FATF on the risks to AML and CFT– July 2020."
The G20 refers to stablecoins with the potential to achieve scale at launch as 'global stablecoins' such as Facebook’s Libra. In a recent hearing before the House of Representatives Committee on Financial Services with Federal Reserve Chairman Jerome Powell, it was mentioned that another entity in a position to achieve similar scale is the Chinese government. Powell was therefore urged to work on the digital dollar to be able to quickly respond to the digital yuan rollout.
Regulatory authorities are working to face such challenges while at the same time developing their own central bank digital currencies. The G20 recognises such developments and thus reiterates its stand of extensively testing global stablecoins before launch.
Reference: Communiqué G20 Finance Ministers & Central Bank Governors Meeting 22-23 February 2020, Riyadh, Saudi Arabia
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