The current landscape of the digital payments industry suggests that global financial regulators are struggling to keep up with the intense pace of innovation and digitalization. The digital payments industry is evolving faster than the relevant legislation, which calls for more attention to be dedicated to the industry and quicker designing of crypto-currency related rules.

The plans of Facebook to launch its own digital currency Libra shook the community of regulators and created fears that the centralized control over money around the world could get reduced.

In a letter to finance ministers and central banks from the G20 Economies, the members of the Financial Stability Board (FSB) acknowledged the rapid progress in the digital payments’ ecosystem. The letter also mentioned the commitment of the FSB to mobilize its efforts for developing timely regulatory and supervisory response to the new instruments that appear on the market. The FSB is made up of regulators, central bankers and governments of major economies. It was established in the aftermath of the 2008 global financial crisis as an early warning mechanism for intercepting risks in the finance industry and preventing other global economic tragedies of the kind. Besides this, a U.S. Federal Reserve working group is working on policies to address the risks and benefits of crypto currencies.

After a meeting that recently took place in Riyadh, the finance ministers of the G20 countries came to a conclusion that risks related to global stablecoins must receive a precise assessment and an appropriate response in the nearest future.

Along with the above-mentioned issues, there is also a need to address the non-banking finance sector, including asset managers and the so-called “shadow banks”. The latter currently accounts for roughly half of global financial assets and requires a more precise analysis, understanding and coordination among the international regulatory authorities. Among the enforced measure for tackling the issue and regulating the relationship with large non-bank entities, the FSB attempted to impose rules like capital buffers, yet the measures were.

The FSB tried to impose rules such as capital buffers on large non-banks, but they received a skeptical feedback from securities regulators. However, these measures might still get enacted, given the current proactive scenario. One thing certain, the existing efforts on non-bank financial intermediation needs profound reorganization.