BigTech companies and their crypt projects and digital money transmission markets pose a serious threat to global financial stability according to the Financial Stability Board as we are reading further in the crypto news today.
In the latest reports published on Sunday, the FSB urged the governments to impose greater monitoring of BigTech companies and their involvement in financial services. While acknowledging the potential for greater financial inclusion, the FSB warns that there could be greater participation of companies such as facebook in crypto payments and e-transfers at large that could pose major risks to the stability of the mainstream financial infrastructure. For the FSB, the major companies with their massive user base could disintermediate banks if they become participants in the payments market. As per the report:
‘’Where stored value payment products (e.g. mobile wallets) become prominent, a relatively large and potentially mobile pool of funds may be controlled outside the banking system (though often these funds are ultimately deposited with banks)… Furthermore, the greater mobility of this pool of funds compared with the customer deposits may also reduce the stability of bank funding.’’
The FSB is not alone in this stance, warning that the BigTech companies and their involvement in crypto assets could destabilize the banks worldwide. Several governments and regulators stated that the Libra crypto project could even affect negatively their ability to control sovereign monetary policies. Such is the level of opposition towards their involvement in digital payments that some of the regulatory stakeholders say their proposed solutions could be domiciled with the mainstream financial institutions. Some of the central banks are also working hard towards the creation of their own national cryptocurrency.
The FSB reports also show that BigTech’s payment entry could expand the problems already identified with fintech lending and the new forms of credit could emerge from this trend are untested which have never gone through a complete financial cycle. The server credit crunch coincides with the proliferation of BigTech payment projects which could end up with negative economic consequences. The FSB is also keen on closely monitoring on Libra’s crypto project as well.
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Stefan has been writing articles for DCForecasts since 2016 in-house full time. As one of our main cryptocurrency writers, he focuses on covering the latest cryptocurrency news, technical charts, price analyses of coins and press releases. When he is not exploring and covering the latest topics in crypto, you can find Stefan playing basketball, tennis or cycling.
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