Central bankers tackle fintech at Davos
Bank leaders have been talking about the threat of disruptors to the global financial system at the World Economic Forum in Davos.
Bank of England Governor, Mark Carney, said cryptocurrencies were unlikely to revolutionise the financial sector.
Canada-born Carney said on Thursday that cryptocurrencies were unlikely to revolutionize the financial sector because they were more like assets than currencies.
“On crypto, it’s not going to disrupt, because they’re not crypto-currencies. They’re at best crypto-assets, but they’re really not going anywhere,” Carney said during a panel discussion at the annual meeting of world political, business and wealthy leaders in the Swiss ski resort of Davos.
Cryptocurrencies have surged over the past four years with values of leading currencies, such as Bitcoin and Ethereum, experiencing roller-coaster rises and falls.
Meanwhile, Japan’s central bank chief, Haruhiko Kuroda, said that fintech companies could disrupt the banking system of advanced economies in a serious way.
“We tend to think that these big tech companies are making a disruptive impact on the banking system,” Kuroda told the World Economic Forum, noting that financial regulators around the world were having to catch up with the new technologies.
He added that big tech companies tended to specialize in payments and settlement rather than deposit-taking and lending, and that dealing with the new entrants to the market was “a very difficult question.”
These sweeping changes in financial technology are bringing new tech companies into the industry, making regulation increasingly challenging.
Kuroda also urged central banks to be vigilant to the rising risk to cyber-security.
“In coming years, probably this cyber-risk issue would be the most serious kind of risk and we have to carefully study and think about ways to strengthen the system against any cyberattack,” Kuroda said.