Nowadays, it has become common to hear than central banks were considering the idea of the dabbling in the digital asset world. This comes after a decade of speculation and discussion about cryptocurrencies and blockchain technology. Despite these, there are still regulators who are on the fence about the industry.
In a recent discussion, Randal Quarles, the Chair of the Financial Stability Board [FSB] stated that regulators need to improve their knowledge about cryptocurrencies.
According to Quarles, regulators across the globe had to ensure they do not fall back on the technological developments that were occurring on a daily basis. He specifically stated that in the coming years, developments like stablecoins and cryptocurrencies would become necessary for societal advancement.
Quarles stated:
“FSB (Financial Stability Board) 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.”
The FSB official also serves as a United States Federal Reserve governor and holds multiple connections with influential members. His keen eye on stablecoins has resulted in the formation of a working group that will look into assets like Tether. The group is also tasked with addressing the risks and benefits of stablecoins so that they can have the potential to be integrated into mainstream society.
The FSB has not settled on a timeline for the release of regulatory clauses, although sources close to the body say that it may be as early as April.Stablecoins were also a pivotal point of discussions among the G20 finance ministers. The top financial honchos met in Riyadh to discuss and mitigate the risks posed by stablecoin adoption.
According to banking officials, there were several loopholes in the current financial ecosystem.Stablecoins also fall under the category of cryptocurrencies, and so far there have been no stringent laws or regulations. This comes at a time when banks were transitioning from the existing London Interbank Offered Rate [LIBOR] to a new method.
Feds across the globe have decided that the LIBOR will be phased out by 2021, by which time they plan to introduce more efficient systems. The FSB has assured everyone that they plan to keep a watch on assets such as stablecoins and stop the vulnerabilities in them.