The emergence of crypto-assets according to the new Financial Stability Board (FSB) chair could be a major challenge for the agency as its present frameworks for assessing global financial vulnerability is intended to be reviewed.
Randal K. Quarles, who is also the vice chair for supervision at the U.S. Federal Reserve Board of Governors while delivering his inaugural speech in Hong Kong on Feb. 10 stated that the review of the FSB’s framework will be initiated so as to ensure it’s “at the cutting edge of financial stability vulnerability assessment.”
Quarles added that despite that such review process is planned to advance the ability of the agency to recommend better policies for the financial stability of the G20 countries, it might be difficult to achieve a well-rounded framework, considering the emerging advancements of new technologies like the cryptocurrency.
“This will not be easy – developments like the emergence of crypto-assets may challenge any framework – but that makes the goal of a robust framework all the more important.”
In a move to provide financial vulnerability assessment for the G20, the FSB was introduced in 2009 following the outcome of the global financial crisis. Back on Nov. 28, Quarles has appointed as the new chair the position which was previously held by the governor of the Bank of England, Mark Carney.
Even though Quarles did not provide a precise explanation as to what scale this framework review process will be, it’s clear that a framework was proposed in July last year by the FSB specifically for “vigilantly” controlling the risks of cryptocurrency with metrics checkmating the price volatility, the rise of initial coin offerings and the use of crypto in payments worldwide.
The FSB’s vice chair Klaas Knot, who is also president of the Dutch National Bank, the central bank of the Netherlands is appointed as the head of the committee set for the review.