Central banks and financial regulators urgently need to get to grips with the growing influence of “Big Tech,” according to top officials from central bank umbrella group the Bank for International Settlements (BIS).
Global watchdogs are increasingly wary that the huge amounts of data controlled by groups such as Facebook, Google, Amazon, and Alibaba could allow them to reshape finance so rapidly that it destabilized entire banking systems.
The BIS, in a paper led by its head Agustin Carstens, pointed to examples such as China where the two big tech payment firms Alipay and WeChat Pay now account for 94% of the mobile payments market.
China has already rattled its markets with a series of clampdowns on top tech and e-commerce firms. Last November regulators torpedoed the public listing of Jack Ma’s fintech Ant Group and in the nine months since other tech giants and, lately, tutoring firms, have all faced scrutiny.
In many other jurisdictions too, tech firms are rapidly establishing footprints, with some also lending to individuals and small businesses as well as offering insurance and wealth management services.
“The entry of big techs into financial services gives rise to new challenges surrounding the concentration of market power and data governance,” the BIS paper published on Monday, August 2, stated.
There was scope for “specific entity-based rules” notably in the European Union, China, and the United States, it added.
“Any impact on the integrity of the monetary system arising from the emergence of dominant platforms ought to be a key concern for the central bank.”
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