Global watchdog flags stablecoin risks, AI threats ahead of G20
The Financial Stability Board flagged cross-border stablecoin risks and AI-related cybersecurity threats while urging G20 policymakers to support stronger safeguards.
The Financial Stability Board (FSB) has cautioned G20 policymakers about potential risks posed by cross-border stablecoins and artificial intelligence (AI) ahead of their upcoming meeting. In a letter published Monday, FSB Chair Andrew Bailey expressed concern that current mechanisms for overseeing stablecoins and managing crises across borders are "immature or not yet developed."
The FSB's 2025 review revealed that only 11 out of 28 surveyed jurisdictions have established comprehensive stablecoin regulatory frameworks. Bailey urged G20 members to endorse the FSB's new guidelines for responsible AI adoption in the financial sector, emphasizing the ongoing need for vigilance alongside careful management by financial institutions.
The letter, submitted to G20 finance ministers and central bank governors, highlighted the risk of stablecoin runs spilling over into traditional markets, potentially leading to forced sales of reserve assets and bank deposit withdrawals. Additionally, Bailey warned about multi-issuer stablecoins, where redemption demand might concentrate on a single issuer while reserves are distributed across different jurisdictions.
These concerns mirror those raised by regulators in the past. In 2025, ECB President Christine Lagarde also voiced concerns about redemption risks involving stablecoins issued both within and outside the European Union. The FSB's AI practices encompass governance at the organizational level, AI development and deployment, cybersecurity, and risks associated with third-party services.
Bailey also cautioned that AI-powered cyber threats could weaken the resilience of critical financial institutions and market infrastructure. Similar regulatory concerns have emerged in recent months, with European central bankers warning in July that AI advancements could exacerbate market volatility and cybersecurity threats. In June, the FSB proposed 12 practices for responsible AI adoption, which were finalized before the G20 meeting.
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