Global payment standard setters want to slash the cost of sending money abroad – and on Monday, an intergovernmental group announced it will be looking at whether stablecoins can help.
The Committee on Payment and Market Infrastructures, an international body that sets norms for the sector, has said that further in the coming months it wants to probe the case for cryptos that seek to maintain value against fiat, according to a report published by the Financial Stability Board, an international entity tasked with monitoring the global financial system supported by central banks and finance ministries worldwide.
The CPMI “is considering whether and how the use of well-designed and risk-managed SAs [stablecoin arrangements] could enhance cross-border payments by addressing existing frictions,” the FSB said, with outcomes to be finalized by the end of this year.
“As the stablecoin sector is evolving rapidly with potential to have an impact at global scale, close attention will be required around risk management,” the report added.
The FSB, supported by the Bank for International Settlements (BIS) and chaired by the Netherlands’ Central Bank President Klaas Knot, is shortly due to present plans to set the world’s crypto rulebook, including sharper norms for stablecoins, ahead of a Wednesday meeting of finance ministers.
The FSB said last year that it wanted credited cross-border payments to be possible within one hour, and with transaction costs of under 1%, by 2027, and is currently exploring a number of avenues for achieving this goal.
Proponents of stablecoins such as libra, later renamed diem and then abandoned, have cited the current high cost and uncertainty of making cross-border payments as a compelling case, for example helping migrant workers send remittances back home.
But others have been more skeptical, especially in the wake of the high-profile collapse of algorithmic stablecoin terraUSD earlier this year. An August report from the European Central Bank proved more skeptical, saying that bitcoin and stablecoins were among the worst options for cutting costs, citing concerns over the dominant market power of privately led solutions.
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