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"Brazil Assumes G20 Presidency: Crypto, AI, and Fintech in the Spotlight"

Kalyani Jha
28 Feb, 2024

In a pivotal transition, Brazil has taken the helm of the G20 presidency from India, setting the stage for crucial discussions on crypto-related policy formulation, asset tokenisation, and responsible handling of Artificial Intelligence (AI). As the global fintech landscape continues to evolve, these focal points will remain at the forefront of deliberations throughout Brazil's tenure, which extends until November this year, as disclosed by the Financial Stability Board (FSB), the global fintech watchdog.

Klaas Knot, Chairperson of the FSB, has outlined key issues for consideration in 2024 in a letter addressed to the G20 nations. This missive, circulated ahead of the group's meetings scheduled for February 28 and 29 in São Paulo, Brazil, underscores the imperative of international coordination in addressing pressing challenges and promoting financial stability.

The FSB reaffirms its commitment to coordinating international efforts through the G20 Roadmap on crypto assets and emphasizes the need to address growing financial stability risks from cyber incidents. In this regard, the FSB is spearheading the design of a format for incident reporting exchange (FIRE), slated for public consultation. Moreover, enhancing mechanisms for processing cross-border payments emerges as another pivotal agenda item.

Amidst the evolving fintech landscape, the FSB's letter underscores the importance of addressing challenges facing the global fintech sector, including potential debt service challenges, exposures to sectors facing headwinds like commercial real estate, and vulnerabilities in the financial system related to leverage and liquidity mismatch in non-bank financial institutions (NBFI).

Throughout 2023, the FSB actively collaborated with India's initiative to establish a global policy framework for overseeing the crypto sector. After receiving feedback from stakeholders and the public, the FSB outlined pointers for crypto regulations, emphasizing supervision and oversight of global stablecoin arrangements (GSCs) and supporting responsible innovation while allowing jurisdictions to implement domestic approaches.

Despite progress in establishing a crypto roadmap for G20 nations, the FSB underscores the need for greater clarity in legal frameworks to ensure the safety and integrity of sectors like crypto and AI. Cross-border cooperation, information sharing, and addressing information gaps remain critical priorities for bolstering financial stability and fostering innovation in the fintech ecosystem.