Wednesday, October 13, 2021
For BLPB readers interested in financial market infrastructures (FMIs), there’s something new and exciting to put on your fall reading list! Don’t wait too long. Comments on the new CPMI-IOSCO Consultative report: Application of the Principles for Financial Market Infrastructures to stablecoin arrangements are due by December 1, 2021.
At the request of the G7, G20, and FSB, the standard setting bodies have produced a “report [that] provides guidance on the application of the Principles for financial market infrastructures (PFMI) to systematically important stablecoin arrangements (SAs), including the entities integral to such arrangements.”
The Executive Summary notes that: “Notwithstanding the fact that the transfer function of SAs is considered an FMI function for the purpose of applying the PFMI, SAs may present some notable and novel features as compared with existing FMIs. These notable features relate to: (i) the potential use of settlement assets that are neither central bank money nor commercial bank money and carry additional financial risk; (ii) the interdependencies between multiple SA functions; (iii) the degree of decentralisation of operations and/or governance; and (iv) a potentially large-scale deployment of emerging technologies such as distributed ledger technology (DLT).”
The report’s guidance is summarized in Table 1 (p. 5-6) and there are nine questions for consultation (p.7).
Once I’ve thought more about the report, I might return to it in a future post. Policymakers are increasingly focused on the regulation of stablecoins and other cryptocurrencies. The topic’s importance is sure only to increase.