Ever since social media giant, Facebook opened up in its plan to float its own digital currency, serious upset has engulfed global banking systems and regulators.
Industry observers say with the volume of global subscribers, Facebook’s currency will hit banks in developing economies’ hard.
Facebook had on Sunday disclosed plans to launch its own digital currency, Libra, in 2020.
Details gathered by Business Hilights showed that Facebook will among other things; 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.
Already, the organisation that represents the world’s central banks has seen the plot as posing risks to the international banking system which now demands thinking out of the box by global policymakers.
Whereas some analysts say although the move of leading technology groups including Facebook, Amazon and Alibaba veering into financial services could speed up transactions and cut costs, especially in developing world countries, they are of the fear that it could also undermine the stability of the global banking system that has only just recovered from the crash of 2008. Besides, the Bank for International Settlements (BIS) has argued 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.
Economic adviser and head of research at BIS, Hyun Song Shin, averred that “The aim should be to respond to big techs’ entry into financial services so as to benefit from the gains while limiting the risks.”
Continuing, he added that “Public policy needs to build on a more comprehensive approach that draws on financial regulation, competition policy and data privacy regulation.”
He added that such move will diminish fears of banking collapse when more technology bodies venture into bitcoin or digital currency transactions.
