• Central Banks are concerned about the launch of Libra: A cryptocurrency by Facebook
  • A working group looked into policies to address risks and benefits related to stable coins, said Quarles (US Federal Reserve governor).
  • G20 finance ministers said the risk factor related to stable coins must be evaluated

The digital payments industry needs to pace up to device rules for cryptocurrencies or stablecoins as global financial regulators are lagging on speedy innovation, said the chair of global finance watchdog.

With Facebook’s plan to launch Libra, Central banks are worried that the currency could lessen state control over money around the world.

More on the regulation front

FSB Chair Randal Quarles mentioned in a letter to finance ministers and central banks from G20—the Group of Economies, “FSB (Financial Stability Board) members recognize the speed of innovation in the area of digital payments, including so-called ‘stablecoins.”

Quarles, who also is a US Federal Reserve governor, shared that a working group was studying policies with an aim to tackle risks and benefits associated with stablecoins.

Quarles also mentioned that the possible regulatory response would be taken ahead for public consultation in April.

G20 finance ministers in their draft conclusions, post the meeting in Riyadh, said that risks from stablecoins need evaluation and must be addressed before they embark on the operation.

The Financial Stability Board that comprises central bankers, regulators, and governments from major economies was formed post the 2007–2009 financial crisis to build an early warning system for risks in the finance industry to prevent a global market meltdown.

Additionally, Quarles also stated in his letter that it was essential for the G20 to create a systematic transition from the devastated Libor interest rate benchmark to safer rates put together by central banks.