Randal Quarles, the chair of Financial Stability Board (FSB) has urged global financial regulators to speed up the establishment of rules for cryptocurrencies, amid the rapidly increasing developments in the industry.
The FSB is a group of global regulators created after the 2007-09 financial crisis. The body, which includes governments and central bankers from major economies, is set to develop an early warning system for risks to avoid another global economic meltdown.
Quarles argued that digital currencies including stablecoins which are at this time largely unregulated deserve recognition because of the rate at which new services are being launched in the digital payment industry.
Writing in a letter to the Group of 20 Economies (G20), which consists of finance ministers and central banks, Quarles mentions that “[the FSB} is resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.”
Already, a working group is considering policies to address the risks and benefits associated with stablecoins, according to the Quarles, who further noted that public consultation would be open in April on possible regulatory responses.
Quarles, who’s also a United States Federal Reserve governor, put forward the need to govern non-banking finance (also known as “shadow banks”), which includes asset managers, in the letter to G20, saying this sector dominated roughly half of financial assets globally.
The FSB has initially tried to establish rules such as capital buffers on big-operating non-banks. However, the move was subsided by securities regulators at that time. It might be revived in some form now, Quarles said, adding:
As this sector grows and evolves, there may be new vulnerabilities that need assessment. The FSB is forming a group to consider what work is appropriate and whether to reorganize existing work on non-bank financial intermediation.
Additionally, the FSB plans to organize a workshop among global supervisors, regulators, and the private sector to arrive at a better regulatory approach to the increasing entry of Big Tech, without posing any risk to the global financial system.
In a separate development, the Thailand Security Exchange Commission (SEC) said in November; it will analyze and adjust its earlier crypto policies to boost industry-related activities.