Financial regulators must act fast to prepare for the push by US tech giants such as Facebook Inc into the financial system, European Central Bank Executive Board member Benoit Coeure said yesterday.
“It’s out of the question to allow them to develop in a regulatory void for their financial service activities, because it’s just too dangerous,” the former deputy director-general of the French Treasury said at annual economic conference in Aix-en-Provence, France. “We have to move more quickly than we’ve been able to do up until now.”
Facebook’s plan for a digital currency called Libra has policymakers scrambling. Bank of England Governor Mark Carney has said the bank approaches it “with an open mind, but not an open door.”
The plan has also drawn fire in Washington, with more than 30 groups influential with Democrats demanding a halt to the project to deal with the “profound questions” it raises.
David Marcus, chief executive of Facebook’s blockchain subsidiary Calibra, is to testify before the US Congress this month on the initiative.
Coeure said that the development of digital currencies is exposing deficiencies in existing regulation and the failure of the banking system to adopt new technology.
“All these projects are a rather useful wake-up call for regulators and public authorities, as they encourage us to raise a number of questions and might make us improve the way we do things,” he said.
He also told reporters on the sidelines of the conference that IMF managing director Christine Lagarde is “uniquely qualified” to lead the ECB in the face of challenges from both inside and outside the eurozone, adding: “She knows how the global economy works. She knows how Europe works. And she knows how to talk to financial markets.”
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