This baseline set of expectations will help avoid regulatory fragmentation and is an important and necessary step. But alone it is not sufficient. Existing standards must be examined and updated where necessary. There needs to be a clear G20 mandate for the various sectoral standard-setting bodies to consider their standards and whether they need to be refreshed or clarified in light of stablecoins. This is necessary to truly deliver on the principle of same risk - same regulation. The Committee on Payments and Market Infrastructure (CPMI) and International Organization of Securities Commissions (IOSCO) are working to ensure that it is clear to stablecoin developers how international standards of regulation and supervision for financial market infrastructures, including payment systems, (the Principles for Financial Market Infrastructures – PFMI) will apply to them, including where stablecoins are used in systemic payment systems. Other standards setters, such as the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision (BCBS), will need to respond as well. Coordination between regulators is essential too. In particular, host regulators of global stablecoins must, and are, working with other regulators in other jurisdictions to ensure that they are appropriately regulated and gaps in coverage, opportunities for regulatory arbitrage, do not emerge. The Bank looks forward to the conclusions of the FSB’s consultation, and the subsequent finalising of international work, to ensure a comprehensive framework can be in place. Current proposed global stablecoin offerings will need to demonstrate how they meet these key domestic and international standards.

First, instead of being required to raise permanent capital, institutions should arrange for capital to be infused when they are in trouble. One example of contingent capital is for banks to issue debt that Page 2/4  automatically converts to equity under specified conditions. The second type of regulation is aimed at ‘too big to fail’ institutions. Instead of limiting their size and activities, a more sustainable form of regulation requires these institutions to develop a plan that would enable them to be resolved over a weekend. Both of these measures proposed by Raghu have become fundamental elements of banking regulation in Switzerland since the financial crisis. Impressive policymaker I have known Raghu for many years. From my personal experience I can say with conviction that he is not only an exceptional scholar but also an impressive policymaker. His career as a policymaker began at the International Monetary Fund (IMF). In the aftermath of the 1997 Asian financial crisis, the IMF wanted to strengthen its financial expertise. Anne Krueger, then the IMF’s First Deputy Managing Director, asked Raghu if he would be interested in becoming the IMF’s Chief Economist. Raghu replied: ‘Anne, I don't know any macroeconomics’. However, this claim was neither convincing nor credible for the IMF’s Deputy Managing Director, and so at the age of 40, Raghu was appointed as the IMF’s Chief Economist. He was both the youngest-ever person to be assigned the position, and the first from an emerging-market nation.