Financial regulators urgently need to master big tech – BIS

LONDON, Aug 2 (Reuters) – Central banks and financial regulators urgently need to tackle growing influence of ‘Big Techs’, say senior officials at the central bank coordinating group, the Bank for International Settlements (BIS).

Global watchdogs are increasingly concerned that the massive amounts of data controlled by groups like Facebook, Google, Amazon and Alibaba will allow them to reshape finance so quickly that it is destabilizing entire banking systems.

In a paper edited by its chief Agustin Carstens, the BIS cited examples such as China where the two big tech payment companies now account for 94% of the mobile payments market.

In many other jurisdictions, tech companies are also quickly setting fingerprints, some also lending to individuals and small businesses, as well as insurance and wealth management services.

“The entry of big technologies into financial services presents new challenges regarding the concentration of market power and data governance,” said the BIS document released on Monday.

There was room for “specific entity-based rules”, notably in the European Union, China and the United States, he added.

“Any impact on the integrity of the monetary system resulting from the emergence of dominant platforms should be of major concern to the central bank.”

Stablecoins – cryptocurrencies linked to existing currencies – and other Big Tech initiatives could “be a game-changer” for the monetary system, the newspaper added, if their entry leads to closed-loop systems bolstered by currency effects. network from data drawn from social media or e-commerce platforms.

It could lead to a fragmentation of payment infrastructures to the detriment of the public good. “Given the potential for rapid change, the absence of currently dominant platforms should not be a source of comfort for central banks,” the newspaper said.

He said they should anticipate developments and formulate policy based on possible scenarios where Big Tech initiatives are already reshaping payments and other parts of financial systems.

“Central banks and financial regulators should urgently invest in monitoring and understanding these developments,” he added. “That way they can be ready to act quickly when needed. “

Reporting by Marc Jones Editing by Mark Potter

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