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Economic Implications of the Use of Personal Information: Potential Impact of the Digital Platform Companies on Payment Services

June 23, 2022
Payment and Settlement Systems Department

  1. Currently at the Financial Markets Department

Personal information is actively collected, processed, and transmitted against the backdrop of the digitalization of people's social activities and the rapid improvement of data analysis methods, including artificial intelligence and machine learning. In order for individuals and society to benefit from the effective use of personal information, it is important that a broad range of entities are able to have proper opportunities to use personal information with due consideration to privacy protection. To achieve this goal, self-management of private information is crucial, but not sufficient - there might remain considerable inefficiencies associated with "market failure" and "negative externalities." This article will provide an overview of international discussion of academics and policy makers regarding these issues. In particular, we will illustrate the mechanism, which might generate monopoly power of the digital platform companies, and potential implications of public digital payment instruments in light of eliminating inefficiencies arising from the less competitive market.


The Bank of Japan Review Series is published by the Bank to explain recent economic and financial topics for a wide range of readers. This report, 2022-E-5, is a translation of the Japanese original, 2022-J-6, published in April 2022. Views expressed are those of the author(s) and do not necessarily reflect those of the Bank.

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