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Chair warns of challenging outlook for the global financial system.
The FSB will issue next Monday its finalised recommendations for the regulation, supervision and oversight of crypto-assets and markets, and of global stablecoin arrangements. Attention will then turn to their full and effective implementation globally to avoid a fragmented regulatory system.
The Financial Stability Board (FSB) today published a letter from its Chair, Klaas Knot, to G20 Finance Ministers and Central Bank Governors, ahead of their meeting on 17-18 July.
The global financial system continues to face a challenging outlook. With most major economies having transitioned out of a low interest rate environment amid ongoing inflation concerns, the prospect of more muted economic growth and further bouts of financial market volatility looms large.
The FSB and other standard setting bodies (SSBs) are working together closely to draw out lessons from the recent banking-sector turmoil. The FSB has reprioritised its work programme, including with an additional focus on the interactions between interest rate and liquidity risk across the financial system, the role of technology and social media in deposit runs and lessons for the effective implementation of the international resolution framework. The work will yield new insights across both banks and non-banks.
Developing a global regulatory framework to address the vulnerabilities in crypto-asset markets and activities has been a key priority of the FSB. The finalisation of the recommendations for the regulation, supervision and oversight both of crypto-assets and markets, and of global stablecoin arrangements, is an important milestone. The FSB is delivering these recommendations to the G20 for its meeting. Attention must now turn to the full and effective implementation of the recommendations globally to avoid a fragmented system that would allow crypto-asset activities to flow to areas where regulation is less stringent. The FSB has been working closely with the SSBs to ensure that the work underway on the monitoring and regulation of crypto-asset activities and markets is coordinated and mutually supportive. The reports to be delivered to the G20 next week will include a shared workplan that the FSB and the SSBs have developed for 2023 and beyond, through which the FSB will continue to coordinate work. In addition, to provide a coordinated and comprehensive policy approach to the policy issues raised by crypto-assets, the FSB and International Monetary Fund (IMF) will deliver a joint paper to the G20 in September, synthesising the policy findings from IMF work on macroeconomic and monetary issues and FSB work on supervisory and regulatory issues...
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