The Bank of International Settlements in Basel has released an advance chapter from its annual report on Cryptocurrencies (Big tech in finance: opportunities and risks).
In this document the bank warns of the challenge for the banking sector and financial stability implied by the irruption of the big tech companies (Alibaba, Amazon, Facebook, Google and Tencent) into the financial sector. The Bank signals that these companies should comply with the same norms as the banks in their activity in the sector (comply with the level playing field principle).
The document also talks about the risk of a “digital monopoly” recognising the competitive advantage enjoyed by the tech companies by owning their clients´ information free and signals that the entrance of these new actors should be accompanied by regulation in both the financial sphere and the protection of client data.
“Public policy needs to build on a more comprehensive approach that draws on financial regulation, competition policy and data privacy regulation. The aim should be to respond to big techs’ entry into financial services so as to benefit from the gains while limiting the risks. As the operations of big techs straddle regulatory perimeters and geographical borders, coordination among authorities – national and international – is crucial,” the report says.
Among possible advantages BIS recognises the positive impact this change will have on society by allowing clients currently without access to certain financial services to access them.