FSB Tells G20: Stablecoin Crises Still Plotting in Draft Mode, AI Playing Unhinged Sidekick

The Financial Stability Board has told Group of Twenty policymakers that cross-border mechanisms for stablecoin oversight and crisis management "remain immature or are not yet developed," according to a letter published Monday from FSB Chair Andrew Bailey. The watchdog submitted the letter and an accompanying report to G20 finance ministers and central bank governors ahead of their Thursday meeting, warning that gaps in stablecoin oversight could transmit stress into traditional markets. The FSB's 2025 review found that 11 of 28 surveyed jurisdictions had finalized stablecoin regulatory frameworks, leaving the global patchwork far from complete.

The accompanying FSB report cautioned that stablecoin runs could spill into traditional markets through forced sales of reserve assets and withdrawals of bank deposits. It also flagged risks for multi-issuer stablecoins, in which redemption demand could concentrate on one issuer while reserves are held in different jurisdictions. Those concerns echo earlier warnings from European Central Bank President Christine Lagarde, who in 2025 highlighted similar redemption risks involving stablecoins issued inside and outside of the European Union.

In the same letter, Bailey urged G20 members to back the FSB's newly finalized practices for responsible AI adoption in the financial sector, covering organization-wide governance, AI development and deployment, cybersecurity, and third-party service risks. "AI therefore requires our continued close attention alongside careful management by financial institutions," Bailey wrote. The FSB finalized the guidance after proposing 12 practices for responsible AI adoption in June, with the package now formally presented to the G20.

Bailey further warned that sophisticated cyber threats enabled by AI could undermine the resilience of critical financial institutions and market infrastructure. European central banks have also flagged that advances in AI could amplify market volatility and cybersecurity threats, raising concerns in July about the technology's rapid spread across financial services.

The G20 brings together the world's major economies to coordinate financial policy and regulatory priorities, giving the FSB's recommendations a direct line into ministerial discussions this week. As reported earlier, Tether and the central bank of Kazakhstan have explored a potential tenge stablecoin and asset tokenization initiative, underscoring how stablecoin projects are advancing even as global supervisory frameworks remain under construction.