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If a poorly designed cross-border payments system were widely adopted, it could do significant harm to international financial stability and economic security, according to a senior Treasury Department official.
Details: Speaking in New York, Assistant Secretary for International Finance Brent Neiman said policymakers should take the risks of new payment systems seriously and be skeptical of any project that avoids safeguards in the current system or transparent governance and oversight.
Stablecoin Risk: Neiman also said that stablecoins—often described as showing promise in facilitating cross-border transactions—are “structurally vulnerable to runs, which can pose risks to consumers and investors, and to financial stability.”
FSB Take: The Financial Stability Board also recently reiterated calls for countries to regulate stablecoins due to concerns about users losing confidence in stablecoins, which could lead to runs on issuers.
ICBA View: As lawmakers continue to debate a regulatory framework for cryptocurrency, the October Independent Banker magazine highlights how ICBA remains engaged to ensure that policymakers address the concerns of community banks.