Andrew Bailey, chair of the Financial Stability Board, used a letter published on Monday to warn G20 finance ministers and central bank governors that the machinery for overseeing stablecoins across borders, and handling a crisis, is still incomplete. The letter was submitted ahead of their Thursday meeting in October 2026.
Bailey wrote that cross-border mechanisms for stablecoin oversight and crisis management “remain immature or are not yet developed.” He urged G20 members to back stronger safeguards and the FSB’s newly finalised practices for responsible use of artificial intelligence in finance.
The concern begins with scale. Cross-border stablecoin payment volumes rose 35-fold from 2020 to mid-2024, and stablecoins now account for about 3 percent of total international payments, according to Juan Marchetti, director of the WTO’s Trade in Services and Investment Division.
Marchetti said: “the constraint is not technology but regulation and shortcomings in regulatory frameworks.”
Stablecoins are digital currencies designed to hold a fixed value. Their appeal is that they can move globally and instantly. The awkward detail is that the regulators who would need to respond to trouble remain organised by jurisdiction.
In its 2025 review, the FSB found that 11 of 28 surveyed jurisdictions had finalised stablecoin regulatory frameworks. Those systems have yet to be tested in severe stress or insolvency, while supervision, crisis management, accountability and cross-border cooperation remain underdeveloped.
The FSB said differing national systems could make cross-border supervision harder and create room for regulatory arbitrage. It also identified stablecoins’ international mobility as a source of risk.
The issue becomes particularly intricate for multi-issuer stablecoins. Circle’s USDC and the Paxos Global Dollar are issued from multiple locations, with reserves designed to be rebalanced across jurisdictions to meet redemptions where holders seek them.
The FSB warned that redemption demand could instead converge on one issuer while the reserves sit in different jurisdictions. A stablecoin run could then reach traditional markets through forced sales of reserve assets and withdrawals of bank deposits.
Christine Lagarde, president of the European Central Bank, warned in 2025 of similar redemption risks involving stablecoins issued inside and outside the European Union.
The potential benefits and weaknesses are unevenly distributed. Developing countries are more likely to gain from stablecoins that reduce high remittance costs, the FSB found, though their regulatory foundations were relatively weak.
Bailey’s letter also turned to AI. In June 2026, the FSB proposed 12 practices for responsible AI adoption before finalising its guidance ahead of the G20 meeting.
“AI therefore requires our continued close attention alongside careful management by financial institutions,” Bailey wrote. He warned that sophisticated AI-enabled cyber threats could weaken the resilience of critical financial institutions and market infrastructure.
European central bankers had made a parallel warning in July, saying advances in AI could amplify market volatility and cybersecurity threats.
The FSB’s request is for the G20 to support safeguards that can work across borders, where the payment tools and cyber risks in question already travel faster than a national response can be assembled.
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