By Janos Barberis, OECD on the Level
On 18 June 2019, Facebook announced the launch of Libra, a decentralised digital currency, or stablecoin. Borderless, it has the ambition to be used by 2 billion people. Policy makers’ reaction was swift but ultimately their efforts amount to only slowing down a more significant trend: the entrance of BigTech in finance. Indeed, to maintain their user growth and share price, tech companies are after the next two big B’s. The next Billion customers they can serve and the next Billion dollars of market capitalisation they can capture. Finance has both.
The last decade has shown us the risk of the financialisation of the economy. Policy makers’ focus since the global financial crisis (GFC) of 2008-09 has been about rebalancing the power gained by big finance. New capital reserves for systemically important financial institutions (SIFI) and personal liability regimes have been introduced in this respect to control firms that have become “Too-Big-To-Fail”.