Cross-Border Regulatory and Supervisory Issues of Global Stablecoin Arrangements in EMDEs

Introduction

The rapid growth of global stablecoin arrangements has raised concerns among policymakers about their potential systemic risks. These concerns are particularly acute in emerging market and developing economies (EMDEs), where financial markets are less developed and more vulnerable to shocks.

Key Issues

Regulatory Fragmentation

One of the key challenges in regulating global stablecoins is the lack of a harmonized regulatory framework. Different jurisdictions have adopted different approaches to regulating stablecoins, leading to regulatory fragmentation.

Cross-Border Supervision

Another challenge is the issue of cross-border supervision. Stablecoins are often issued and traded across borders, making it difficult for regulators to effectively supervise them.

Consumer Protection

There is also concern about the potential for consumer protection risks associated with global stablecoins. Stablecoins are often marketed as a safe and stable alternative to traditional currencies, but they may not be as safe as they seem.

Policy Recommendations

The FSB has made a number of policy recommendations to address the challenges posed by global stablecoin arrangements. These recommendations include:

• Establishing a clear and comprehensive regulatory framework for global stablecoins.
• Developing a cooperative framework for cross-border supervision of global stablecoins.
• Implementing strong consumer protection measures for global stablecoins.

Conclusion

The cross-border regulatory and supervisory issues of global stablecoin arrangements are complex and challenging. However, by working together, policymakers can develop a comprehensive and effective framework to address these risks.