By Marc Jones
LONDON, Feb 7 (Reuters) - A global central bank test lab
run out of London is designing a 'stablecoin' monitoring system
aimed at giving authorities a clearer picture on how they work
and how to regulate them in future.
Stablecoins are a type of cryptocurrency which aim to
maintain a 1:1 peg with a fiat currency such as the dollar. The
collapse last year of a widely-used stablecoin pair, Luna and
TerraUSD, sparked widespread turmoil in crypto markets.
In a bid to ensure there is more oversight going forward,
the Bank for International Settlements (BIS), often dubbed the
central bank for the world's central banks, is to begin work in
its London 'innovation hub' on a tool to keep tabs on them.
It is expected to run various tests and simulations on a yet
to-be-defined number of stablecoins and their balance sheets and
come up with preliminary findings by the end of the year.
"Most central banks lack tools to systemically monitor
stablecoins and avoid asset-liability mismatches," the BIS said.
The project, named Pyxtrial after an ancient judicial
ceremony in Britain to ensure newly minted coins conformed to
required standards, could help regulators "build policy
frameworks" the BIS added.
One of the key hopes is that it will give more visibility on
what assets stablecoins are backed by.
The Financial Stability Board (FSB), which coordinates
financial rulemaking among Group of 20 Economies (G20), made a
set of recommendations in October on beefing up cryptomarket
oversight.
Currently, the sector is largely unregulated in most
countries, having to only comply with rules for safeguarding
against money laundering and terrorist financing as regulators
warn investors they risk losing every penny.
(Additional reporting by Elizabeth Howcroft
Editing by Christina Fincher)
Messaging: marc.jones.thomsonreuters.com@reuters.net Twitter
@marcjonesrtrs))
