IMF, FSB, FATF to update G20 nations, others on implementing roadmap for crypto assets, says FM

IMF, FSB, FATF to update G20 nations, others on implementing roadmap for crypto assets, says FM

Subject: International relation

Section: International organisation

Context: THE INTERNATIONAL Monetary Fund (IMF), Financial Stability Board (FSB) and the Financial Action Taskforce (FATF)will provide regular updates to G20 member nations and other countries about the progress related to implementation of the G20 roadmap for crypto assets, Finance Minister Nirmala Sitharaman

• The Financial Stability Board is headquartered in Basel, Switzerland.
• It is hosted and funded by the Bank for International Settlements, and is established as a not-for-profit association under Swiss law.
• The Board includes all G20 major economies, FSF members, and the European Commission.
• The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.
• More specifically, the FSB was established to:
  • Assess vulnerabilities affecting the global financial system as well as to identify and review, on a timely and ongoing basis within a macroprudential perspective, the regulatory, supervisory and related actions needed to address these vulnerabilities and their outcomes.
  • Promote coordination and information exchange among authorities responsible for financial stability.
  • Monitor and advise on market developments and their implications for regulatory policy.
  • Monitor and advise on best practice in meeting regulatory standards.
  • Undertake joint strategic reviews of the international standard-setting bodies and coordinate their respective policy development work to ensure this work is timely, coordinated, focused on priorities and addresses gaps.
  • Set guidelines for establishing and supporting supervisory colleges.
  • Support contingency planning for cross-border crisis management, particularly with regard to systemically important firms.
  • Collaborate with the International Monetary Fund (IMF) to conduct Early Warning Exercises.
  • Promote member jurisdictions’ implementation of agreed commitments, standards and policy recommendations, through monitoring of implementation, peer review and disclosure.
• The FSB’s structure comprises the Plenary as the sole decision-making body, a Steering Committee to take forward operational work in between Plenary meetings, and three Standing Committees, each with specific but complementary responsibilities towards the above process:
  • The Standing Committee on Assessment of Vulnerabilities (SCAV), which is the FSB’s main mechanism for identifying and assessing risks in the financial system.
  • The Standing Committee on Supervisory and Regulatory Cooperation (SRC), which is charged with undertaking further supervisory analysis or framing a regulatory or supervisory policy response to a material vulnerability identified by SCAV.
  • The Standing Committee on Standards Implementation (SCSI), which is responsible for monitoring the implementation of agreed FSB policy initiatives and international standards.
• The FSB’s decisions are not legally binding on its members – instead the organisation operates by moral suasion and peer pressure, in order to set internationally agreed policies and minimum standards that its members commit to implementing at national level.
• Unlike most multilateral financial institutions, the FSB lacks a legal form and any formal power, given that its charter is an informal and nonbinding memorandum of understanding for cooperation adopted by its members.
• The FSB has 68 member institutions, comprising ministries of finance, central banks, and supervisory and regulatory authorities from 25 jurisdictions as well as 10 international organizations and standard-setting bodies, and 6 Regional Consultative Groups reaching out to 65 other jurisdictions around the world.
• Organizations
  • Bank for International Settlements
  • European Central Bank
  • European Commission
  • International Monetary Fund
  • Organisation for Economic Co-operation and Development
  • The World Bank
• Standard-setting bodies
  • Basel Committee on Banking Supervision
  • International Association of Insurance Supervisors
  • International Organization of Securities Commissions

Crypto-assets:

• Crypto assets are purely digital assets that use public ledgers over the internet to prove ownership.
• They use cryptography, peer-to-peer networks and distributed ledger technology (DLT) – such as blockchain – to create, verify and secure transactions.
• They can have different functions and characteristics: they may be used as a medium of exchange; a way to store value; or for other business purposes.
• Crypto assets generally operate independently of a central bank, central authority or government.
• Some of the more common types of crypto assets are:
  • Cryptocurrency
  • Utility Tokens
  • Security Tokens
  • Non-Fungible Tokens
  • Stable coins
• A simpler way to understand a crypto asset is that they are digital assets except:
  • Crypto assets use cryptography
  • This kind of asset depends on distributed ledger technology.
  • One does not need a third such as a bank to issue crypto assets like what happens with bitcoins.
  • Crypto assets have three primary uses: as an investment, a means of exchange, and to access goods and services.