FSB Warns of Stablecoin Risks and AI Threats Ahead of G20 Meeting

The Financial Stability Board (FSB) highlighted the risks of stablecoins and cybersecurity threats associated with AI, urging G20 policymakers to support stricter protective measures. In a letter published on Monday, FSB Chair Andrew Bailey warned that cross-border oversight mechanisms for stablecoins and crisis management "remain underdeveloped or yet to be formed." In its 2025 review, the FSB found that 11 out of 28 surveyed jurisdictions had completed the development of regulatory frameworks for stablecoins. It also urged G20 participants to support the newly endorsed FSB practices for the responsible use of AI in the financial sector. "Artificial intelligence requires our constant vigilant oversight and careful management by financial organizations," Bailey wrote.

The FSB sent the letter to finance ministers and central bank governors of G20 countries ahead of their meeting on Thursday. The G20 brings together the world's largest economies to coordinate financial policy and regulatory priorities.

In the report accompanying the letter, the FSB noted that mass redemption of stablecoins could spill over into traditional markets through forced sales of reserve assets and bank deposit withdrawals. The regulator also identified risks for stablecoins with multiple issuers, where redemption demand may concentrate on one issuer while reserves are held in different jurisdictions.

These concerns align with previously raised issues. In 2025, European Central Bank President Christine Lagarde warned of similar redemption risks for stablecoins issued within and outside the European Union.

FSB's AI practices cover organizational governance, AI development and implementation, cybersecurity, and third-party risks. Bailey warned that sophisticated AI-backed cyber threats could undermine the resilience of critical financial institutions and market infrastructure. In July, European central banks warned that AI advancements could heighten volatility and cyber threats. In June, the FSB proposed 12 practices for the responsible use of AI ahead of the final approval of recommendations for the G20 meeting.