IMF Chief Highlights Potential Disruptive Nature of Fintech

IMF chief Christine Lagarde has warned that giant tech companies might cause significant disruption to the world’s financial system.

She said just a few companies with big data access and artificial intelligence could run the global payment and settlement arrangements.

Christine Lagarde’s warning came as the G20 finance ministers met in the Japan’s south-western city of Fukuoka.

The G20 summit is also discussing the need to close tax loopholes for internet giants like Facebook and Google.

One of the options being considered is to tax such companies where they make their profits – rather than where they base their headquarters.

She said: “A significant disruption to the financial landscape is likely to come from the big tech firms.”

IMF Revises Down US and UK Economies Growth Forecasts

IMF Cuts US Economy Growth Forecasts

The International Monetary Fund head said such companies “will use their enormous customer bases and deep pockets to offer financial products based on big data and artificial intelligence”.

“This presents a unique systemic challenge to financial stability and efficiency,” she added.

Christine Lagarde cited China as a most recent example.

She said: “Over the last five years, technology growth in China has been extremely successful and allowed millions of new entrants to benefit from access to financial products and the creation of high-quality jobs.

“But it has also led to two firms controlling more than 90% of the mobile payments market.”