LONDON: Central banks and financial regulators urgently need to get to grips with the growing influence of ‘Big Tech’, according to top officials from central bank umbrella group the Bank for International Settlements (BIS).
Global watchdogs are increasing wary that the huge amounts of data controlled by groups such as Facebook, Google, Amazon and Alibaba could allow them to reshape finance so rapidly that it destabilises entire banking systems.
In many other jurisdictions, tech firms are rapidly establishing footprints too, with some also lending to individuals and small businesses as well as offering insurance and wealth management services.
“The entry of big techs into financial services gives rise to new challenges surrounding the concentration of market power and data governance,” the BIS paper published on Monday said.
There was scope for “specific entity-based rules” notably in the European Union, China and the United States, it added.
“Any impact on the integrity of the monetary system arising from the emergence of dominant platforms ought to be a key concern for the central bank.”
Stablecoins - cryptocurrencies pegged to existing currencies - and other Big Tech initiatives could be “a game changer” for the monetary system, the paper added, if their entry leads to closed-loop systems reinforced by network effects from data drawn from social media or e-commerce platforms.