La Bank of international regulations (BIS) recently stated that the adoption of digital currencies, such as Facebook Libra, could undermine the stability of the global banking system. So the plan of Facebook to launch and manage its own cryptocurrency seems to urge other cautions, with clear emphasis by the institution that it poses risks for the international banking system which, according to the organization representing the world's central banks, should do the accounts with a prompt response from the global policymakers.
The commitment of large technology companies like Facebook, Amazon e Alibaba in financial services it could speed up transactions and cut costs, especially in developing countries, but according to the BIS it could also undermine the stability of a banking system that has just recovered from the collapse of 2008.
In short, echoing a well-established position, the Bank for International Settlements said that although there are potential benefits to be achieved, the adoption of digital currencies outside the current financial system could reduce competition and create confidentiality of data.
"The goal should be to respond to the entry of great technicians into financial services in order to benefit from profits and limit risks," he said Hyun Song Shin, economic advisor and head of research of the BIS. "Policies must be based on a more global approach that is based on financial regulation, competition policy and regulation on data privacy" - he added.
The bank's warning comes only a few days after the Facebook launch of its own currency digital, Pound, scheduled for 2020. The currency will allow its billions of users to make financial transactions worldwide, with an opening that could potentially shake the global banking system.
Chris Hughes, Facebook co-founder, last week added his voice to concerns expressed about big tech's move in finance, warning that Libra could transfer strong power into the wrong hands. Hughes, who is co-president of the Economic Security Project, a campaign against poverty, said: "although success will be modest, Libra will relinquish much of its monetary policy control from central banks to these private companies. If global regulators don't act now, it may soon be too late".
We remember, however, how Facebook is in good company. Other technology companies have entered the world of finance, such as Alibaba and eBay, which offer Alipay and PayPal payment services respectively. Some large tech companies have also started offering insurance products, using their platforms as a distribution channel for third-party products, including auto and health insurance. Others have ventured into lending, especially to small businesses and consumers, generally for short periods.
