The Financial Stability Board (FSB) will be releasing reports on asset tokenization and AI later in 2024, as communicated by FSB Chair Klaas Knot. Despite the ongoing challenges faced by the global financial system, Knot outlined a strategy in a letter to G20 finance ministers and central bankers. The FSB is gearing up for a meeting scheduled for February 28-29 in São Paulo, Brazil, and has identified key priority areas for the year 2024.
Priority Areas and Initiatives
In addition to asset tokenization and AI, the FSB will focus on non-bank financial intermediation, climate change, and cross-border payments in 2024. The G20 approved a global regulatory and supervisory framework for crypto assets last year, highlighting the importance of regulating this emerging sector. A Synthesis Paper jointly developed by the FSB and the International Monetary Fund introduced the G20 Roadmap on Crypto Assets, endorsed in October.
One of the key initiatives of the FSB is to propose a standardized format for incident reporting, allowing for the simultaneous sharing of incident reports among various financial institutions and agencies. The rapid digitalization of finance has increased efficiencies but also heightened the interconnectedness of the global financial system. This interconnectedness poses risks of cyber or operational incidents with potential spillover effects across borders and sectors.
Anti-Money Laundering and Know Your Customer (KYC)
Addressing Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements is also a priority for the FSB in the realm of cross-border payments. By strengthening AML and KYC measures, the FSB aims to enhance the integrity and security of cross-border financial transactions. These efforts are crucial in combating financial crimes and ensuring the transparency of international payments.
The G20, comprising 19 countries along with the European Union and the African Union, plays a pivotal role in shaping global financial regulations and policies. Brazil has assumed the presidency of the G20 for 2024, succeeding India, which emphasized the need for global crypto regulation during its leadership. South Africa is set to take over the G20 presidency in 2025, continuing the organization’s mandate of promoting financial stability and cooperation on an international scale.
About the Financial Stability Board
Established in 2009, the FSB is an international organization that succeeded the Financial Stability Forum. Comprised of central banks and financial authorities from major economies, the FSB is responsible for monitoring and recommending policies to enhance global financial stability, identify risks, and promote the implementation of measures to safeguard against systemic threats. Through its initiatives and reports, the FSB plays a crucial role in fostering collaboration and regulatory frameworks in the ever-evolving financial landscape.
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