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
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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.
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.