Bigtech in general, and Libra in particular, could harm the banking sector

The Bank of International Settlements (BIS) published a report Sunday that warned banks of impending danger from companies such as Facebook, Amazon and Google due to the ability of these ‘big techs’ to establish a dominant position.

Facebook recently launched its Libra cryptocurrency that would serve the under-banked and allow global money transfers at very low costs.

Facebook, Google and Amazon have a huge database of users that these companies can leverage for entry into financial services.

Level playing field required

The BIS stressed that global regulators should balance benefits such as financial inclusion with the risks to financial stability, privacy of data and healthy competition.

Already there have been murmurs that Libra will enable Facebook to don the garb of a shadow bank, and that regulators should maintain a vigil on its activities.

Global co-ordination needed

“The aim should be to respond to big techs’ entry into financial services so as to benefit from the gains while limiting the risks,” the BIS said in its report . As the operations of big techs straddle regulatory perimeters and geographical borders, coordination among authorities – national and international – is crucial.”