The International Banking Regulatory Body or Basel Committee is an organization controlled by central banks from 27 countries around the world, to deal with issues relating to the supervision of the banking sector. It has just adopted new measures regarding stablecoins, in light of recent events in the crypto industry. Decryption.
The Basel Committee prefers to play it safe with stablecoins
The international banking regulator has just published a new proposal guidelines for banks. The production of this new document comes against a backdrop of uncertainties and a lackluster outlook for cryptos. The new version incorporates stakeholder feedback and recent developments in the crypto markets.
the document provides for banks, better management and more prudent management of their exposure to digital assets. It mainly goes back to the previous directives relating to stablecoins. These were intended to allow stablecoins to be stress tested based on the possibility of selling them for an amount that takes into account their reference value.
Going forward, the document recommends that banks’ exposure to stablecoins should be overseen from top to bottom. This, according to the existing capital and liquidity requirements imposed on traditional financial institutions. He also wants any testing of stablecoin exposure to be done in addition, not instead.
“Today’s endorsement from the group of central bank governors and supervisors marks an important step in building a global regulatory foundation to mitigate the risks crypto poses to banks. It is important to continue to monitor bank-related developments in the crypto markets. We remain ready to take further action if necessary.”said Tiff Macklem, Governor of the Bank of Canada.
The new version of the guidance document for banks vis-à-vis stablecoins provides that banks limit their exposure to certain tokens to less than 1% of their basic capital. You should know that the Basel Committee plans to finalize a new framework for banking standards by 2025.
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