On the 25 November 2021, the Financial Stability Board (FSB) Regional Consultative Group (RCG) for the Commonwealth of Independent States (CIS) met to discuss key risks relating to high debt levels and crypto assets.
Membership of the RCG CIS comprises financial authorities from Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Russia and Tajikistan. The current co-chairs are the Deputy Finance Minister of the Russian Federation, and the Deputy Governor for the Central Bank of Armenia.
The FSB coordinates the implementation of international and national standard setting amongst national financial authorities, developing and promoting the implementation of effective financial and regulatory policies to foster stable financial markets.
During the meeting, members discussed vulnerabilities in the global financial system that are of particular relevance to CIS economies and Emerging Market and Developing Economies (EMDEs) more generally. Topics covered included:
- Long-term financial risks resulting from COVID-19, in particular, corporate and household over-indebtedness and possible policy responses.
- Procyclicality in the financial system and policy implications for EMDEs.
- Developments in crypto-asset markets, including their impact on financial systems and financial stability in EMDEs. This is particularly relevant given the recent acceleration in the use of digital assets during the COVID-19 pandemic. Stablecoins have seen a significant uptick in use, specifically as a means of payment. Moreover, the upcoming advent of Central Bank Digital Currencies (CBDCs) may have significant impacts on payment markets and on credit efficiency in financial systems.
- Risks to financial stability relating to the entry of retail investors into CIS capital markets. Retail investors may also be vulnerable to speculation in crypto-assets, as these typically have no or very limited investor protections.
- Progress to date and next steps for the G20 roadmap to enhance cross-border payments.
- Promoting the development of financial education and the implementation of strategies to improve financial literacy in CIS countries.
Looking ahead, the group received an update on the FSB’s work programme for 2022, to be discussed at a later stage.