LONDON (Reuters) – Global financial regulators risk falling behind on rapid innovation in the digital payments industry and need to work more quickly to devise rules for crypto-currencies or “stablecoins”, the chair of a global finance watchdog said on Wednesday.
Central banks are worried that Facebook’s (FB.O) plans to launch its Libra digital currency could reduce state control over money around the world.
“FSB (Financial Stability Board) members recognise the speed of innovation in the area of digital payments, including so-called ‘stablecoins’, FSB Chair Randal Quarles said in a letter to finance ministers and central banks from the Group of 20 Economies (G20).
“We are resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.”
Quarles, who is also a U.S. Federal Reserve governor, said a working group was looking at policies to address the risks and benefits of stablecoins.
Possible regulatory responses would be put to a public consultation in April, he said.
G20 finance ministers said in draft conclusions of their meeting in Riyadh on Saturday and Sunday that risks from global stablecoins need to be evaluated and appropriately addressed before they start operation.
The FSB, made up of regulators, central bankers and governments from major economies, was created after the 2007-09 financial crisis to create an early warning system for risks in the finance industry before they become another global market meltdown.