Global Finance Watchdog Warns That Cryptocurrencies are Leaving Regulators Behind
Since the world of digital payments is continuing to grow very rapidly and to come up with all kinds of innovations, regulators need to keep up with the pace as far as cryptocurrencies go.
Central banks from all over the world are concerned that Facebook’s Libra is going to reduce the states’ control over money. Here’s what Randal Quarles from the Financial Stability Board (FSB) has said in a letter he sent to G20 central banks and finance ministers:
“FSB members recognise the speed of innovation in the area of digital payments, including so-called ‘stablecoins’. We are resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.”
Also a US Federal Reserve governor, Quarles mentioned there’s a Federal Reserve working group looking over the policies meant to address the benefits and risks of stablecoins.
A Public Consultation for Possible Regulatory Responses
Quarles also said that a public consultation for possible regulatory responses is going to take place in April. At the Riyadh meetings from Saturday and Sunday, G20 finance ministers mentioned how the risks involved with stablecoins need evaluation and be properly addressed. The FSB consists of governments, central bankers and regulators from the most important economies in the world. It was created soon after the 2007-2009 financial crisis in order to analyze the finance industry risks.
Quarles Also Talked About Libor
In his letter, Quarles also talked about how G20 members should make the central bank’s transition from the Libor interest rate to safer rates a priority. Libor is supposed to disappear by the end of next year, but it has been massively used in credit cards and home loans all over the world, so it sums $400 trillion. Here are Quarles’ exact words on this matter:
“The official sector has warned that the question concerning Libor is when it will end, not whether it will end. Nevertheless, some continue to speculate that Libor could remain in production indefinitely. This speculation is misguided.”
Asset Managers to Be Addressed Too
Quarles’ concerns were also about asset managers, which are widely known as “shadow banks”. He said this finance sector accounts for half of the financial assets in the world, so it needs to be better understood and coordinated by regulators.