SINGAPORE (July 1): Big technology companies have upended industries ranging from music to retailing. What will be their disruptive impact on financial services? That is the latest conundrum keeping bank regulators awake at night. Innovations such as Facebook’s new global digital currency, Libra, demand a joined-up response. That will be hard to agree.

Technology firms have been burrowing into parts of the banking industry for years. In some countries, the insurgency is all but complete. Alipay, the payments service spawned by Chinese e-commerce giant Alibaba Group Holding, claims a billion users. Big technology companies earned 11% of their combined revenue from financial services last year, according to the Bank for International Settlements (BIS). Though the largest chunk of that came from Asia, upstarts are making inroads in the West.

The onslaught presents regulators with a four-dimensional challenge. For starters, digital technology enables new products that do not fit neatly into standard financial categories. Take Libra. Facebook says the currency will be a stable digital token backed by assets in a range of currencies — though users will not receive the interest on those assets. Some regulators may view this as akin to a bank deposit. Others could conclude it is more like an investment in a fund. The picture might become clearer as Facebook explains how ordinary users will acquire and use Libra. The danger, however, is that it is treated differently between countries, allowing the fledgling product to wriggle through gaps in existing rules.

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