Global Watchdog FSB Urges G20 to Address Stablecoin and AI Risks

The Financial Stability Board (FSB) has warned that gaps in stablecoin regulation and advancing AI capabilities could threaten global financial stability, urging G20 policymakers to strengthen oversight and support safeguards for AI use in finance.

In a letter published on October 12, FSB Chair Andrew Bailey said cross-border arrangements for stablecoin supervision and crisis management “remain immature or are not yet developed.” The FSB’s 2025 review found that only 11 of 28 surveyed jurisdictions had finalized regulatory frameworks for stablecoins.

An accompanying report warns that large-scale stablecoin redemptions could transmit stress to traditional financial markets. Issuers may have to sell reserve assets to meet withdrawal demands, while users moving stablecoins could contribute to bank deposit changes. Multi-issuer arrangements pose additional challenges when redemption pressure falls on one issuer, but reserve assets are held across different jurisdictions. 

Bailey also called for continued attention to AI risks. The FSB warned that increasingly sophisticated AI-enabled cyberattacks could threaten critical financial institutions and market infrastructure. Its newly finalized guidance for financial institutions covers organization-wide governance, AI development and deployment, cybersecurity, and risks involving third-party service providers.

The letter and reports were submitted ahead of the G20 finance ministers and central bank governors’ meeting on October 15. In them, the FSB is calling for stronger international cooperation on stablecoin vulnerabilities and the responsible adoption of AI across the financial sector.