The financial risk regulators of the Group of 20 (G20) have issued a warning to world leaders ahead of the South Africa summit: the booming private credit market and stablecoins deserve close monitoring.

In a letter to G20 leaders published on Thursday, Financial Stability Board (FSB) Chair Andrew Bailey called for a global effort to "modernise and strengthen" financial regulation without compromising financial stability.

The letter highlighted the growing role of non-bank financial intermediaries, including the private credit market, and stated this would be one of the FSB's main priorities next year.

The letter particularly emphasized the "urgency" of improving cross-border payments and establishing a "robust framework" for stablecoins. Stablecoins are a type of cryptocurrency typically pegged 1:1 to real-world currencies or assets like the US dollar.

Bailey wrote in the letter: "Differences in regulatory and prudential frameworks (for stablecoins) across jurisdictions could add additional complexity and potential risks."

"It is equally important to consider how stablecoins can operate across borders effectively and safely."

News Source: Reuters Authors: Marc Jones and Phoebe Seers Translator: 烤仔

Policymakers outside the US generally worry that widespread adoption of US dollar-backed stablecoins could lead to a partial "dollarization" of their economies, thereby weakening their domestic monetary policy power and creating thorny issues if bailout measures are needed in the future.

Bailey also noted in the letter that major economies have failed to implement global banking standards, including Basel III.

The Basel Committee on Banking Supervision reiterated on Wednesday that the "full, timely and consistent" implementation of stricter capital rules remains its "highest priority."

These reform agreements reached in 2017 were originally intended as the final response to the 2008 financial crisis. However, both the European Commission and the UK have delayed the implementation of Basel 3.1 until 2027, awaiting clarity from the United States, which has previously expressed resistance to the plan.

Facing pressure from various sides, the Basel Committee appears to be softening a specific aspect of its rules.

Basel Committee Chair Erik Thedéen told the Financial Times on Wednesday that, given the "dramatic" rise of stablecoins since the rules were agreed three years ago, it is necessary to revisit the exposure requirements for crypto assets.

This crypto asset regulatory framework was originally scheduled to take effect on January 1st, but as of now, neither the US nor the UK has committed to adhering to this date.