Applications such as Facebook Libra can pose a risk to banks

The BIS (Bank of International Settlements) is concerned. Large tech companies such as those offering financial services pose a risk to the banking sector. For example, you can think of Facebook’s Libra. This is according to a report from the BIS of 23 June.

The BIS is an international financial institution based in Switzerland. It is the umbrella organization for 60 central banks worldwide. The European Central Bank, for example, also falls under the supervision of the BIS.

Libra can make international payments easier.

In the report, the BIS also refers to Libra, the crypto currency of Facebook. The BIS admits: innovations such as Libra can make international payments easier. In addition, more people have access to manage their own finances with Libra.

With Libra, Facebook can conveniently use its data network, says the BIS. Users of Libra can then manage money more easily without needing a bank. This is nicely expressed in English as Banking the Unbanked.

..but also carries risks

Nevertheless, the BIS is concerned: “These benefits simultaneously create risks and challenges.” For example, you can think of managing data and guaranteeing privacy.

The BIS also notes that large tech companies can become a serious competitor for established financial institutions. This development is at the expense of the traditional banking sector and financial institutions.

Read the BIS report yourself? That is possible here.

Read other reactions about Libra here

Facebook published the white paper for Libra on Tuesday 18 June. This news caused a lot of commotion. Not only in the crypto world, but also beyond. The BIS has therefore expressed its concerns in its report. But not only the BIS speaks out against Libra. Worldwide there is much talk about the plan of the social media giant.