Banking Reliance On Tech Giants Needs Regulation, Bank Of England Says

According to the Bank of England, there is a need for new rules governing the reliance of financial institutions on the cloud services provided by tech giants such as Amazon AMZN, Alphabet GOOG GOOGL and Microsoft MSFT.

What Happened: According to a Friday Reuters report, the Bank of England's Financial Policy Committee said in a statement that "regulated firms will continue to have primary responsibility for managing risks stemming from their outsourcing and third-party dependencies."

The statement also suggested that "additional policy measures, some requiring legislative change, are likely to be needed to" mitigate the risk caused by concentrating the services in the hand of third-party service providers.

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Such new measures could include the ability to define third parties as "critical" and enforce resilience standards that would be regularly tested.

England's central bank and local financial regulator Financial Conduct Authority plan to releases a discussion paper on the subject in 2022, and the measures proposed are similar to those contained in a European Union law that is making its way through the legislative process.