The Bank for International Settlements (BIS), considered the central bank of the central banks, has warned that Facebook's planned crypto competition project, Libra, could damage the banking sector.
BIS published a report on Sunday, saying that large companies such as Facebook, Amazon and Google could "quickly establish a dominant position", thanks to their extensive network of users. While these companies can improve financial inclusion, they can also present threats to financial stability, competition and data protection, BIS said.
Regulators around the world will therefore need to coordinate to ensure "equal competition between big techs and banks." They will also need to take a "more comprehensive" approach based on financial regulation, competition policy and data protection rules, BIS said, and added:
"The goal should be to respond to big tech's entry into financial services, so to take advantage of the gains while limiting the risk. As the operations of major tech's regular regulatory perimeters and geographical boundaries are coordination between authorities ̵
Facebook, along with 27 basic partners, uncovered a plan for a" low volatility "cryptocurrency called Libra last week, which intends to service the unbanked and facilitate low-cost transactions globally. The Libra is expected to go live sometime next year, but it has already met review from central banks and politicians around the world. For example, Markus Ferber, a German member of the European Parliament, warned that Facebook could become a "shadow bank" and said regulators should be vigilant.