The Financial Stability Board (FSB), a global financial watchdog, has outlined financial stability risks associated with artificial intelligence and regulatory concerns surrounding stablecoins ahead of a Group of Twenty meeting Thursday.
In a letter published Monday, FSB Chair Andrew Bailey warned that cross-border mechanisms for stablecoin oversight and crisis management "remain immature or are not yet developed." According to the FSB's 2025 review, only 11 of 28 surveyed jurisdictions had finalized stablecoin regulatory frameworks.
Bailey also urged G20 members to support the FSB's newly finalized practices for responsible AI adoption in the financial sector. "AI therefore requires our continued close attention alongside careful management by financial institutions," Bailey wrote.
Stablecoin Risks to Traditional Markets
The FSB warned that stablecoin runs could spill into traditional markets through forced sales of reserve assets and withdrawals of bank deposits. The watchdog also identified risks for multi-issuer stablecoins where redemption demand could concentrate on one issuer while reserves are held in different jurisdictions.
These concerns reflect warnings previously raised by regulators. In 2025, European Central Bank President Christine Lagarde warned of similar redemption risks involving stablecoins issued inside and outside the European Union.
AI Safeguards in Financial Institutions
The FSB's AI practices cover organization-wide governance, AI development and deployment, cybersecurity and third-party service risks. Bailey warned that sophisticated cyber threats enabled by AI could undermine the resilience of critical financial institutions and market infrastructure.
Similar regulatory concerns emerged in July, when European central bankers warned that advances in AI could amplify market volatility and cybersecurity threats. In June, the FSB had proposed 12 practices for responsible AI adoption before finalizing its guidance for the upcoming G20 meeting.
