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The banking benefits of Facebook and other technology giants



The influential Bank for International Settlements (BIS) has highlighted the dilemma faced by regulators as a result of Facebook's transition to the financial sector.

After Facebook unveiled a plan for next year, the rise of "big tech" could actually affect the competition According to BIS, the launch of a global cryptocurrency could be privately owned along with other technology giants such as Google, Amazon, Alibaba and Tencent in China trigger a "rapid" change in global finance.

Technology companies currently have limited presence in China Financial services, with key players generating only 1

1 percent of their sales in the industry, said Swiss-based BIS on Monday. New technology could quickly make large technology companies "systemically important." Financial institutions, "the BIS said.

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  Facebook is planning to create a worldwide digital currency that is a matter of concern for financial regulators and privacy professionals.

MARCIO JOSE SANCHEZ / AP

Facebook's plan to create a global digital currency is already causing concern among financial regulators and privacy professionals.

At the same time, BIS-recognized technology companies entering the financial sector could benefit. Large technology companies could increase efficiency and promote wider access to credit, as their extensive customer data could lower the cost of credit rating for borrowers.

The onslaught of technology firms on banking could turn basic ideas in financial regulation like conventional ones upside down It is well known that promoting new entrants is conducive to competition. The BIS said it was "anything but obvious" that the entry of large technology companies into banking would make the market more competitive if their market power and knowledge of data analytics were taken into account.

and competition – when large technicians are considered as new entrants. This is because great technicians can build and consolidate their market power by controlling key digital platforms, "the BIS said in a chapter of their annual report.

  This picture shows what the Calibra Digital Wallet App might look like. Facebook founded the Calibra Subsidiary to create a new digital currency that resembles bitcoin for worldwide use.

AP

This picture shows what the Calibra digital wallet app might look like. Facebook founded the Calibra subsidiary to create a Creating new digital currency that resembles bitcoin for worldwide use.

The control of online search, social networking and ecommerce platforms by large tech companies can lead to these companies being "direct." Conflicts of interest "Banks have also relied on these platforms, the BIS said.

There is also the risk that large technicians might be in danger companies use data and market power for anticompetitive purposes, for example, to gain a "digital monopoly" and to determine the maximum price for a customer willing to pay for credit or insurance, it said.

Large tech companies, however, may also be able to finance loans without borrowers having to deposit assets as collateral.

This is underlined by the commentary of the BIS The complex task that governments and regulators face in assessing Facebook's plan to introduce a new currency, the Libra, from about 100 global companies, including Uber, Spotify and Visa, is supported.

Regulators want to foster competition and innovation in banking, but they also need to address issues such as privacy and the fact that large technology companies operate across national borders.

  Big technology companies like Facebook could quickly become systemically important financial institutions, the BIS said. [19659007] JENNY KANE / AP </cite></p>
<p>  Big technology companies like Facebook could quickly become "systemically important financial institutions" said the BIS profits while limiting the risks, "said the head of BIZ research, Hyun Song Shin. </p><div><script async src=

The BIS, whose owners are global central banks, plays a key role in international regulators' discussions on financial stability and banking regulation, and in a call to journalists, Shin said it was too early to formulate an opinion on Facebook's Libra plan

So far, the step by Facebook in the finances has been taken with caution by local authorities.

Reserve Bank of Australia Governor Philip Lowe said last week that "many regulatory issues" would need to be resolved, and he asked whether the consumers would accept the offer, the Australian Competition and Consumer Commission (ACCC), which in Last year, as well as other regulators, they expressed concern over the announcement. The banking industry has also grappled with "open banking," a new system that customers use to bank their financial data and pass it on to technology-based competitors.

Again, however, BIS representatives pointed to potential risks on the grounds that large technology companies would most likely outperform consumer data competitors, which could increase the competitive advantage of large technology companies over banks.


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