The Financial Stability Board has warned G20 finance ministers that cross-border mechanisms for stablecoin oversight and crisis management "remain immature or are not yet developed," according to a letter published Monday and submitted ahead of the G20's Thursday meeting.

FSB Chair Andrew Bailey, who also heads the Bank of England, delivered the assessment to G20 finance ministers and central bank governors. The letter accompanied a report covering two of the watchdog's priority risk areas: stablecoin regulation and artificial intelligence in the financial sector.

"AI therefore requires our continued close attention alongside careful management by financial institutions," Bailey wrote.

How far have stablecoin frameworks actually progressed?

The FSB's 2025 review found that 11 of 28 surveyed jurisdictions have finalized stablecoin regulatory frameworks. That leaves more than half of surveyed jurisdictions without completed rules for a token class that operates across borders by design.

The gap matters because the FSB identified specific transmission channels through which stablecoin stress could reach traditional markets. A stablecoin run, the watchdog warned, could spill into conventional finance through forced sales of reserve assets and withdrawals of bank deposits.

The report also flagged a structural risk in multi-issuer stablecoins: redemption demand could concentrate on a single issuer while the backing reserves sit in a different jurisdiction. That mismatch between where liabilities crystallize and where assets are held complicates crisis management, since no single regulator controls the full resolution picture.

These concerns are not new to European policymakers. In 2025, European Central Bank President Christine Lagarde raised similar redemption risks involving stablecoins issued inside and outside the European Union.

What do the AI safeguards require?

Alongside the stablecoin warnings, Bailey urged G20 members to back the FSB's newly finalized practices for responsible AI adoption in the financial sector. The FSB first proposed 12 such practices in June before finalizing the guidance for this week's G20 meeting.

The finalized practices cover:

• organization-wide governance of AI systems;
• AI development and deployment standards;
• cybersecurity controls;
• management of third-party service risks.

Bailey cautioned that sophisticated cyber threats enabled by AI could undermine the resilience of critical financial institutions and market infrastructure. The warning aligns with broader regulatory attention: in July, European central bankers cautioned that advances in AI could amplify market volatility and cybersecurity threats.

What happens next?

The G20 meeting on Thursday gives finance ministers and central bank governors the first opportunity to endorse the FSB's finalized AI practices and to signal political support for closing the stablecoin regulatory gap. For stablecoin issuers and banks holding reserve assets, the FSB's findings point to tighter cross-border coordination requirements — and faster finalization of frameworks in the jurisdictions that have not yet completed them — as the 2025 review cycle continues.