London — European Union regulators to update how cross-border financial services are scrutinized and consumers protected as the sector becomes digitized and the role of “Big Tech” grows. Said that prompt action is needed.
People turn to social media and use their smartphones to buy and sell stocks, move bank accounts and make payments. This trend has been accelerated by the COVID-19 pandemic, and regulators are catching up.
“Digital finance has unleashed a new synergistic effect between financial and non-financial activities that can pose systemic risk to the financial services market,” said EU banks, insurance and market watchdogs. The joint report states.
Banks and other financial companies using cloud computing, or providers outsourced to services, are booming, the report said.
It may be unclear how to classify some digital financial services based on existing rules, and there is uncertainty about data privacy, anti-money laundering safeguards, and the amount of capital they need to hold. Will occur.
It called on Block’s Executive European Commission, which launched public consultation on digital finance, to take a “holistic” view of financial services oversight.
A new “monitoring structure” is needed to capture transactions across “mixed activity” groups or MAGs such as Amazon, Google, Meta Facebook, Apple, and other big tech companies offering financial and non-financial services. May be.
The crash of German payments company Wirecard has shown that complex arrangements within groups that provide both financial and non-financial services create specific challenges for supervisors, the report said.
“Advances in the digitization and digitization of financial services will require closer cooperation between financial and related non-financial authorities,” the report said.
The report states that regulatory measures may be justified given that some of the posts on social media are effectively advertising.
“Especially in the stock market, the growth of digital trading platforms is in line with new trends such as’social trading’and investment advice shared on social media. This offers new opportunities, but it also comes with risks. “