Big tech putting global financial stability at risk say central banks
The entry of financial giants such as Facebook into the world of finance could jeopardise the stability of the global financial system.
This is according to the Bank for International Settlements (BIS), the 'bank for central banks' and the oldest global financial institution.
Extracts from the body's latest annual review show that BIS is concerned about the impact of developments such as Facebook's newly-announced Libra digital currency, and Amazon's ambitions to enter the business lending market.
The document suggests that as well as systemic risks the moves could have adverse effects on welfare.
BIS is concerned that the huge caches of data held by the leading tech companies could lead to deepening financial exclusion as the firms filter out more people seen as high risk.
The data could also be used to price gouge, for example enabling those companies to calculate the absolute maximum a borrower can afford to pay and price their products accordingly.
Per the Financial Times, BIS economic adviser and head of research Hyun Song Shin said: “The aim should be to respond to big tech’s entry into financial services so as to benefit from the gains while limiting the risks.
“Public policy needs to build on a more comprehensive approach that draws on financial regulation, competition policy and data privacy regulation.”