FSC ViceChairman Sohn Byungdoo attended the Financial Stability Board (FSB) steeringcommittee meeting held on January 13, 2020 in Basel, Switzerland.

The steeringcommittee meeting was attended by the heads of central banks and financialregulatory bodies from 20 countries and 11 international organizations, such asthe International Monetary Fund and the European Central Bank. The members helddiscussions on the risk assessment of non-bank financial institutions and waysto respond to risks associated with stablecoins.

With regard to non-bankfinancial intermediaries, Vice Chairman Sohn stated that it is both timely andimportant to reassess the regulatory and supervisory framework of non-bankfinancial intermediaries given their size and global linkages. The recent trendof low interest rates may further aggravate risks in non-bank financialintermediaries due to a prevalent tendency toward high-risk, high-yield assets,Vice Chairman Sohn said.

In this regard,the Korean government has been managing potential systemic risks in non-bankfinancial sectors by analyzing ‘activities’ and ‘entities’ separately, ViceChairman Sohn added.

On regulatingstablecoins, the FSC agreed on the principle that a holistic approach to riskassessment should take place and that appropriate regulatory measures should beestablished prior to incorporating stablecoins in the global financial system.Considering the effects of stablecoins on monetary policy and anti-moneylaundering regime, the FSC reaffirmed the need to bolster cooperation withinternational organizations, such as the IMF and the Financial Action TaskForce.

To preventregulatory arbitrage using stablecoins, Vice Chairman Sohn emphasized theimportance of increasing efforts for coordination between the developed anddeveloping countries.

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