As tech firms such as Facebook move into the world of finance, the Bank for International Settlements (BIS) said on Sunday (June 23) that politicians need to coordinate regulatory responses to risks provided by these companies coming into the space. BIS said that the social media firm’s recent announcement that it aims to roll out its Libra digital currency and grow into payments has focused the minds of central bankers as well as regulators, Reuters reported.
The move involves data privacy and competition as well as markets and banking — each a segment with regulators that have to be coordinated. BIS Economic Adviser and Head of Research Hyun Song Shin said, according to the report, “To make that coordination possible, I think there would need to be more of a concerted effort on the part of our political leaders to take that forward.”
“The role of Big Tech in finance introduces very many new and very unfamiliar elements, which pushes us to take a fresh look at some of the activities that international policymakers engage in,” Shin also said per the report. “This is something that needs attention sooner rather than later.” As it stands, the BIS published a big tech in finance chapter in its annual report on Sunday. It reportedly examined the voluminous amount of information that search engines, eCommerce and social media companies hold.
The news comes as Bank of England (BOE) Governor Mark Carney said last week that Facebook’s newly-announced Libra digital currency can’t be the same unregulated type of service that the social media platform is. “The Bank of England approaches Libra with an open mind but not an open door,” Carney said, per a Reuters report. Carney continued, per the report, “Unlike social media … the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”
Carney’s remarks were part of a planned speech with Finance Minister Philip Hammond, who was expected to discuss the dangers a no-deal Brexit could cause (one of which could be a Scottish independence vote).