LONDON: Central banks set out to regulate cross-border stablecoins like Facebook's planned Libra with a common approach on Tuesday, saying more rules may later be needed to ensure stability.
The prospect of a currency-backed stablecoin being used by billions of people on Facebook has galvanised central banks into putting together rules and forced them to consider how they could launch their own digital currency.
Existing national rules do not fully cover stablecoins the Financial Stability Board (FSB) said in a statement, adding that regulators should ensure that global stablecoins are fully accountable, keep data safely, have effective safeguards against cyber attacks and money laundering.
The FSB said it will take "appropriate actions" to ensure implementation of the guidance to avoid regulatory gaps that could undermine financial stability, by adhering to all applicable regulatory standards, addressing risks to financial stability before commencing operation, and adapting to new regulatory requirements as necessary.
The FSB, which groups central banks and financial regulators from the Group of 20 Economies (G20) and put a draft version of its recommendations to public consultation in April, said stablecoins could bring efficiencies to cross-border retail payments, which tend to be slow and expensive.
"A widely adopted stablecoin with a potential reach and use across multiple jurisdictions could become systemically important," the FSB said in a report to G20 finance ministers.
"Authorities agree on the need to apply supervisory and oversight capabilities and practices under the 'same business, same risk, same rules' principle," it said.
Regulators for bank capital and anti-money laundering will report by December 2021 on whether rule changes are needed. A review of how stablecoins are being regulated will be completed by July 2023, the FSB added.