This CPMI report highlights a range of considerations and challenges regarding the use of stablecoin arrangements in cross-border payments.
Extensive work on the standards and framework for the appropriate regulation, supervision and oversight of stablecoin arrangements has been underway in the standard-setting bodies and the Financial Stability Board (FSB) based on a thorough analysis of risks associated with stablecoin arrangements.
Alongside this international policy and standard-setting work, the G20 cross-border payments programme, launched in 2020, has identified the importance of exploring the role of new technologies that could be used for payment infrastructures and arrangements. The cross-border payments programme covers a range of initiatives, including improvements to the cross-border interoperability of existing infrastructures and arrangements. It also explores the use of central bank digital currencies in cross-border payments. The use of stablecoins in cross-border payments – the topic of this report – is another future scenario among many. Accordingly, this report should be read in this broader context.
The report first discusses key features of stablecoin arrangements that are relevant from the perspective of cross-border payments. Second, it highlights a range of relevant considerations and challenges. Third, it analyses how stablecoin arrangements might interact and coexist with other payment methods. Fourth, it evaluates the potential impact of their use on the monetary policy, financial stability and payment functions of central banks. Throughout the report it acknowledges the importance of jurisdictional differences regarding regulatory frameworks and macroeconomic conditions.
There are divergent policy approaches to stablecoins across jurisdictions: some jurisdictions have made it clear that they will not accept stablecoins because of potential risks to monetary sovereignty, financial stability and seigniorage income; others choose to regulate stablecoins to address these risks, acknowledging potential roles that stablecoins and their underlying technology could play in future payment ecosystems in their jurisdictions.
The report acknowledges that no stablecoin arrangements yet exist that are deemed to be properly designed and regulated and fully compliant with all relevant regulatory requirements. Further, even if such stablecoin arrangements did exist and could help to address specific cross-border payment frictions, they might not necessarily positively impact cross-border payments as the drawbacks could outweigh any potential benefits. The report also makes clear that any benefits from the cross-border use of stablecoin arrangements must not be achieved by compromising on the principle of “same business, same risks or risk profile, same regulatory outcome”.