The Governor of the Bank of England and head of the Financial Stability Board (FSB), Andrew Bailey, has urged G20 countries to enhance international cooperation and improve stablecoin regulation. According to him, the lack of unified rules and the sharp increase in private financing pose additional threats to the stability of the global financial system.
This is reported by Finway
Global Challenges and New Risks from Stablecoins
Speaking before representatives of the G20, Bailey announced the need to reform the FSB’s monitoring system so that it can more quickly identify and effectively respond to new financial vulnerabilities. He particularly emphasized the rapid growth of stablecoins—digital assets whose values are pegged to traditional currencies, primarily the US dollar.
“Whether it is the growth of private financing, the impact of geopolitical tensions, or the increasing role of stablecoins in payments and settlements—our ability to timely identify and mitigate new risks is critically important,” he stressed in a letter sent ahead of this week’s G20 meetings.
The FSB plans to organize open discussions among participants and deepen cooperation with the private sector to incorporate their experiences and insights on potential risks. Experts estimate that the stablecoin market in the US could grow to $2 trillion. Proponents call these digital assets the “payment model of the 21st century,” while critics warn of new challenges for financial security.
Regulatory Arbitrage and the Need for Global Standards
Bailey emphasized that many countries have yet to complete the implementation of regulatory frameworks for stablecoins, leaving gaps in the protection of financial stability. He warned against the phenomenon of “regulatory arbitrage,” where companies exploit differences between jurisdictions to evade oversight. European regulators are also considering a ban on stablecoins issued simultaneously within and outside the EU due to the risks of so-called “cross-jurisdictional leakage of financial threats.”
Separately, Bailey expressed concern about the slowdown in reforms in the banking sector: over the past 15 years, G20 countries have failed to ensure “full, timely, and consistent implementation” of post-crisis rules, including the Basel Endgame package.
“This requires a deeper understanding of the reasons for these gaps and identifying steps we can take to address them,” he added.
The statement came amid changes in the Bank of England’s position on digital assets. While in September the British regulator faced criticism for proposing to limit individual ownership of stablecoins, by October the BoE announced its intention to relax these restrictions and allow the use of stablecoins in a “sandbox for digital securities,” which is expected to foster financial innovation.