LONDON (Reuters) – Politicians need to be quick and to coordinate regulatory responses to emerging risks, technology firms such as Facebook move into finance, but the banks won’t be squeezed out any time soon, the Bank for International settlements (BIS) said on Sunday.
FILE PHOTO: a Small toy figures are set out in the declarations of the virtual currency in the face of the Facebook logo in this illustration picture the 21 of June, 2019 at the latest. REUTERS/dado Ruvic/File Photo
The social media group’s announcement last week that it will extend to the payments, and the introduction of its own currency, weight Scale, has targeted the minds of regulators and central bankers, the BIS said.
Such a move by a Large Tech-mixes detailed information on the activities that could potentially undermine financial stability, the BIS said.
The running of the competition, rights of privacy, of markets and of the banking, all the areas have their own regulators, and that it would need to co-ordinate, Hyun Song Shin, economic adviser and head of research at the BIS, told reporters.
“In order to ensure that co-ordination is possible, and I think that there needs to be a concerted effort on the part of our political leadership to take it forward,” Shin said.
The Group of Seven economies, and is looking into Facebook’s plans, but it is not a global authority, and has taken the lead role so far.
Shin suggested that it would be able to be a part of the Group of 20 economies (G-20), an agency that last year failed to yield a consensus that went beyond the collection of information about cryptoassets.
“The role of the Large-Tech for business and finance introduced lots of new elements, which drives us to take a fresh look at some of the activities of international policy-makers to go in,” Shin said.
“This is something that needs to be addressed, sooner rather than later.”
BIS is the Big Technology picture: tmsnrt.rs/2FomG8P
WITH THANKS TO THE MEETING
Shin said the BIS, a forum for central banks based in Basel, Switzerland, was a “courtesy consultation with the originators of the Scale to the project for the announcement, but you know what, the social media company has made available to the public.
He added that the questions about what kind of regulation to Scales, it would be subject to the do not come to the meeting, declining to give details of where it took place.
Banks are facing foreign competition in the payments and financial technology (fintech) companies, but many of them are relatively small, and without the depth of data that the likes of Google, Alibaba, Amazon, Apple and eBay, have to worry about.
On Sunday, the BIS published a chapter in the Big-Tech-funding of its annual economic report.
She looked at the sheer volume of data created by social media, search engines and e-commerce businesses, giving them an immediate advantage over other fintech companies and banks.
The date of entry into force of the finances, was able to stimulate rapid changes in the financial services industry, as a wide range of information about consumer behavior and preferences provides a more detailed picture of an individual’s credit rating, the BIS said.
Banks typically rely on credit scoring models.
While it’s Great Technology that could lead to financial services becoming available to people who are normally closed on the banking, which increases the possible data, privacy and competition issues, Shin said.
It was in the early days, the impact on the Scale and it goes up. “We need to be much longer before we’ll be able to come up with a verdict,” Shin said.
FILE PHOTO: The head office of the Bank for International settlements (BIS), are to be seen in in Basel, Switzerland, March 26, 2019. REUTERS/Arnd Wiegmann/File Photo
The regulators will need to decide what are the activities of Facebook and others for business and finance to fit in all of the existing regulated product categories. The same activity needs to be the face of the regulation, the BIS, the paper said, though, Shin added, “We should not rule out the possibility that there may be a new approach that is more appropriate.”
However, even for the largest excursions in the area of Large-Tech and finance, such as money market funds in China are a tiny fraction of the world total of bank deposits, the BIS said.
“The banks are not in danger of being squeezed out,” Shin said. “It is not easy to be alarmist here, as the bank continues to be a major advantage.”
Reporting by Huw Jones and Tom Wilson; Editing by David Holmes