FSB Under Bailey: Financial Stability Board's New Priorities for Global Crypto Governance

The Financial Stability Board is not a regulator. It has no enforcement powers, no direct supervisory authority over firms, and no binding legislative authority. What it has is something arguably more powerful in the long run: the convening authority and analytical credibility that turns its recommendations into national policy across G20 member jurisdictions.

The FSB’s chair sets the agenda — determining which risks receive priority attention, which standard-setting bodies are tasked with which deliverables, and how the FSB engages with the IMF, World Bank, IOSCO, BCBS, and the other members of the international financial regulatory architecture. Andrew Bailey’s assumption of the chair in July 2025 brought a specific financial stability philosophy and a dual institutional role unprecedented in recent FSB history.

FSB: Structure and Mandate

The FSB was created at the 2009 G20 Pittsburgh Summit as the successor to the Financial Stability Forum, significantly expanded in membership and mandate in response to the 2008 financial crisis. Its membership includes central banks, finance ministries, and financial supervisory authorities from the G20 nations, plus Spain and the European Commission, along with the major international standard-setting bodies.

The FSB’s mandate is to identify and address vulnerabilities in the global financial system. It monitors systemic risk, coordinates the work of standard-setting bodies on cross-cutting issues, develops its own recommendations on topics that fall between existing standard-setters’ mandates, and conducts peer reviews of how well its member jurisdictions implement its recommendations.

Crypto regulation became an FSB priority as the crypto market grew to a scale where systemic risk questions became credible. The 2022 crypto market collapse — $2 trillion in losses — accelerated this process, producing the FSB’s July 2023 high-level recommendations and accompanying implementation reviews.

Klaas Knot’s Legacy and the July 2025 Transition

Klaas Knot, the President of the Netherlands’ De Nederlandsche Bank and FSB Chair from 2022 to July 2025, established the framework that Bailey inherited. Under Knot, the FSB produced its comprehensive crypto recommendations, anchored to the “same activity, same risk, same regulation” principle, and conducted the initial monitoring of implementation progress.

The July 2025 transition was orderly — FSB chair transitions are managed carefully to maintain institutional continuity — with Knot completing the review cycle he had initiated and Bailey assuming the chair with the FSB’s crypto work programme already substantially advanced.

What changed with Bailey was the chair’s specific institutional perspective. Knot brought a euro area central banking view: Dutch financial stability concerns, ECB coordination priorities, and the perspective of a smaller G20 member that depends on international financial stability standards more than the largest economies do. Bailey brings a UK central banking view: post-Brexit regulatory independence, the BoE’s specific monetary policy and financial stability experience, and the UK’s position as a major but independent financial centre.

These perspectives produce similar broad conclusions — comprehensive crypto regulation is necessary, stablecoin risks are significant, cross-border coordination matters — but different emphases in implementation.

The October 2025 Peer Review: Findings and Recommendations

The FSB’s October 2025 thematic peer review of crypto regulation implementation was the first major deliverable under Bailey’s chairmanship. The review assessed how well FSB member jurisdictions had implemented the 2023 high-level recommendations — examining regulatory perimeter coverage, authorisation requirements, consumer protection frameworks, and cross-border supervisory cooperation.

The review’s headline finding was significant gaps. Several major jurisdictions — including some G20 members — had not enacted the legislative frameworks necessary to implement the recommendations at all. Others had frameworks that were formally compliant but had significant implementation gaps in supervision and enforcement. Cross-border supervisory cooperation — sharing information across jurisdictions about the same firms — remained inadequate, with formal arrangements existing but practical information exchange falling short of what effective multi-jurisdictional supervision requires.

The stablecoin findings were particularly notable. Multiple jurisdictions had not enacted comprehensive stablecoin frameworks meeting FSB standards. The review identified this as the most significant gap — stablecoin growth was continuing, the systemic risk potential was growing, and the regulatory frameworks that should manage that risk were behind the market’s development.

The eight new recommendations the FSB issued in October 2025 focused primarily on these gaps: stronger stablecoin reserve and redemption requirements, enhanced cross-border information sharing protocols, and expedited regulatory perimeter extension to cover crypto activities currently outside regulatory frameworks.

Bailey’s FSB Priorities

The priorities Bailey has articulated for the FSB under his chairmanship reflect his financial stability philosophy applied at international scale.

Stablecoin comprehensive regulation is his primary emphasis. Bailey has consistently argued that stablecoins at scale represent the most plausible channel through which crypto can transmit stress to the traditional financial system — through reserve asset markets, through payment system dependencies, or through confidence contagion. His FSB work programme prioritises developing more specific international standards for stablecoin reserves, redemption frameworks, and operational resilience.

Implementation gap closure is the second priority. FSB recommendations that are not implemented provide no financial stability benefit. Bailey’s peer review programme — continuing Knot’s peer review schedule — is designed to maintain pressure on jurisdictions that have adopted recommendations in form but not in practice.

Cross-border supervisory cooperation improvement reflects the operational reality that large crypto entities are multi-jurisdictional but supervision is national. The FSB under Bailey is developing enhanced information-sharing protocols and mechanisms for coordinated supervisory action against entities that operate across multiple FSB member jurisdictions.

The Political Dynamics: US, EU, and Emerging Market Interests

The FSB’s effectiveness depends on the voluntary cooperation of its member jurisdictions. G20 members that disagree with FSB recommendations can implement them less fully without formal consequences, though IMF Financial Sector Assessment Programmes create some accountability.

The US poses the most significant challenge for Bailey’s FSB. The Trump administration’s crypto approach — pro-innovation, lighter-touch regulation — is in tension with the FSB’s comprehensive regulation standards in some dimensions. Bailey must engage constructively with US counterparts, maintaining the FSB’s credibility as an institution that includes the US rather than one that the US ignores.

The EU’s comprehensive MiCA framework broadly aligns with FSB standards, making EU member participation relatively straightforward. Emerging market members present different challenges: jurisdictions with less developed regulatory capacity struggle to implement standards designed primarily for sophisticated regulatory systems.

Bailey’s dual role concentrates influence but also complicates it. As BoE Governor, he advocates for UK domestic positions. As FSB Chair, he must represent the entire FSB membership’s interests, which are sometimes in tension with UK positions. Navigating this dual accountability is the defining institutional challenge of his FSB chairmanship.