The Bank for International Settlements, BIS, has said that Facebook’s plan to operate its own digital currency poses risks to the international banking system that should trigger a speedy response from global policymakers.
BIS, which represents the world’s central banks, said that although the move of big tech firms such as Facebook, Amazon and Alibaba into financial services could speed up transactions and cut costs, especially in developing world countries, it could also undermine the stability of a banking system that has only just recovered from the crash of 2008.
Echoing warnings from many tech experts, BIS said that while there were potential benefits to be made, the adoption of digital currencies outside the current financial system could reduce competition and create data privacy issues.
The warning from the BIS on Sunday comes only days after Facebook announced it would launch its own digital currency, Libra, in 2020. It will allow its billions of users to make financial transactions across the globe in a move that could potentially shake up the world’s banking system.
Chris Hughes, a co-founder of Facebook, last week added his voice to concerns being expressed over big tech’s move into finance, warning that Libra could shift power into the wrong hands.