The Financial Stability Board (FSB), a key international body overseeing the global financial system, has outlined its comprehensive plans for 2024. The FSB’s Work Programme focuses on the evolving landscape of digital finance, emphasizing regulatory frameworks for crypto-assets and the implications of digital innovations like tokenization and artificial intelligence (AI).
A primary objective for the FSB in 2024 is to ensure the effective implementation of a global regulatory and supervisory framework for crypto-asset activities and markets, including international stablecoin arrangements. This initiative follows the development of a global regulatory framework for crypto in July 2023, which was recommended to the G20 nations. Key aspects of this framework include segregating clients’ digital assets, separating functions to prevent conflicts of interest, and ensuring tight cross-border cooperation and oversight among regulators.
The FSB’s agenda extends to exploring the financial stability implications of tokenization and AI. In 2024, the FSB plans to complete its work on tokenization, aiming to understand its impact on financial stability. This will involve assessing current and planned asset tokenization projects. Additionally, the FSB will prepare a detailed report for the G20 on recent developments in AI and their potential effects on financial stability. This report is scheduled for November 2024, while the report on tokenization is expected in October.
Another critical aspect of the FSB’s 2024 programme is enhancing cyber resilience. This includes designing a format for Incident Reporting Exchange (FIRE) to standardize how financial institutions report cyber incidents to monetary authorities. In April 2023, the FSB proposed the FIRE standard to facilitate better information exchange and convergence among authorities.
The need for consistency in reporting cyber incidents has been identified as a common requirement among financial authorities. The FIRE proposal aims to provide a unified reporting format to streamline and improve the efficiency of information sharing.
In light of these developments, the Association for Financial Markets in Europe has echoed the FSB’s stance, urging EU lawmakers to include decentralized finance (DeFi) in the upcoming EU-wide crypto framework. This move signifies the growing recognition of DeFi’s role in the broader financial landscape.
The FSB’s Work Programme for 2024 marks a significant step towards addressing the challenges and opportunities presented by digital finance. By focusing on regulatory frameworks for crypto-assets, the implications of tokenization and AI, and enhancing cyber resilience, the FSB aims to foster a stable and secure global financial system in the face of rapid technological advancements.
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