The Financial Stability Board and the International Monetary Fund: Delivering a Global Crypto Policy
The Financial Stability Board (FSB) and the International Monetary Fund (IMF) are joining forces to address global crypto policy. FSB Chair Klaas Knot announced in a letter that they will present a joint paper at the upcoming G20 Summit.
This paper, requested by India, aims to provide a comprehensive policy response to the risks posed by crypto-assets. It emphasizes the need for global coordination, cooperation, and information sharing. Recent events, such as the FTX exchange bankruptcy and the collapse of the terraUSD stablecoin, have exposed vulnerabilities in the crypto market.
Knot highlights that the risks associated with crypto-assets extend beyond financial stability, affecting macroeconomic factors like monetary sovereignty, capital flow volatility, and fiscal policy. The paper will particularly focus on the macrofinancial risks faced by emerging markets and developed economies, potentially leading to targeted measures.
The G20 nations have urged for global collaboration in addressing these risks, with India advocating for a specific focus on the implications for emerging markets and developing economies. The FSB has already called for a global framework, which may build upon existing rules rather than starting from scratch.
Hot Take:
Global coordination on crypto policy is crucial to address the risks and vulnerabilities in the market. By collaborating and sharing information, countries can better protect their financial systems and mitigate macrofinancial risks. The upcoming joint paper from the FSB and IMF at the G20 Summit signals a significant step towards this global coordination. It highlights the need to consider not only financial stability but also broader macroeconomic implications. The risks associated with crypto-assets are not limited to one country or region; they have the potential to impact the global economy. As the crypto market continues to evolve, it is essential to stay vigilant and adapt regulatory frameworks accordingly.
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