On 13 July 2022, the Financial Stability Board (FSB) published a letter to G20 Finance Ministers and Central Bank Governors regarding the current outlook for financial stability ahead of their meeting on 15-16 July.

The letter warns that the combination of lower growth, rising inflation and tighter global financial conditions may crystallise pre-existing vulnerabilities in the global financial system or give rise to new ones. In particular, rising indebtedness across sovereigns, non-financial corporates and households, liquidity mismatches and hidden leverage in non-bank financial intermediation, and the adverse effects of tightening financial conditions on Emerging Market and Developing Economies.

The letter sets out the progress made on the FSB’s Roadmap for Addressing Climate-related Financial Rusks during its first year in four key areas: disclosures, data, vulnerabilities analysis, and regulatory and supervisory approaches. It also flags a recent communication on crypto-assets, which clarifies that stablecoins and other crypto-assets do not operate in a regulation-free space and that crypto-asset providers must not commence operations in any jurisdiction unless they meet all applicable regulatory, supervisory and oversight requirements.

The FSB will report to the Finance Ministers and Central Bank Governors meeting in October on regulatory and supervisory approaches to stablecoins and other crypto-assets.