Meta, Facebook’s parent company, has warned that it would pull out of Europe if the authorities continue with the move to stop it from exchanging data from European users with the United States, according to a document the company has filed with the US Securities and Exchange Commission (SEC).

The development is coming on the heels of Meta’s massive shares plunge that wiped off over $250 billion from the social media giant’s market value last week.

Facebook has been bedeviled by tightening private data policies that Europe is heralding, and has increasingly found itself in the grip of unfavorable regulations. This latest faceoff with European regulators may affect the company’s existence in Europe.

“If a new transatlantic data transfer framework is not adopted and we unable to continue to rely on SCCs (standard contractual clauses) or rely upon other alternative means of data transfers from United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe.

“If we are unable to transfer data between and among countries and regions in which we operate, or if we are restricted from sharing data among our products and services, it could affect our ability to targets,” Meta said in a statement, admitting that any changes would materially and adversely affect our business, financial condition, and results of operations.

The case started several years ago with a complaint from the Austrian privacy activist Maximilian Schrems about Facebook Ireland, the company’s European headquarters. Schrems had complained to the Irish data protection authority about Facebook Ireland’s transfer of personal data to its parent company in the US. He wondered whether they were sufficiently protected in the US.

Meta has weighed pulling out of a country as an option against unfavorable regulatory legislations before now. Last year, the social media behemoth moved to quit its news service in Australia as the government introduced a legislation that will force it to pay publishers for their content. Meta reversed its decision after the Australian government softened the legislation.

Europe has been tightening its antitrust laws to hold the Big Tech accountable for how they use private data of consumers. In 2020, Facebook was told by privacy regulators in Ireland that it could no longer use standard contractual clauses to comply with privacy rules when sending data to the US, the so-called Privacy Shield.

European regulators are trying to set new privacy-focused policies that are different from what is obtainable in the US. The European Court of Justice has said that personal data is less well protected in the US than in Europe. The US and the EU have tried to work out a new policy on the use of private data, but it is yet to be implemented.

Meta, which heavily relies on the processing of user data in order to provide targeted online advertisements, immediately protested the move, saying it will greatly hurt its business.

If Europe proceeds with the rule, it will have a devastating impact on businesses relying on Meta’s social media platforms, Facebook, Instagram and WhatsApp to offer their services.

“A lack of safe, secure and legal international data transfers would damage the economy and hamper the growth of data-driven businesses in the EU, just as we seek a recovery from covid-19,” City AM quoted Nick Clegg, Meta’s VP of Global Affairs and Communication as saying.

“The impact would be felt by businesses large and small, across multiple sectors. While policymakers are working towards a sustainable, long-term solution, we urge regulators to adopt a proportionate and pragmatic approach to minimize disruption to the many thousands of businesses who, like Facebook, have been relying on these mechanisms in good faith to transfer data in a safe and secure way,” he added.

However, Meta is likely going to suffer more as businesses relying on it would eventually switch to alternative social media platforms. The company’s recent shares’ plunge was largely as a result of Apple’s ATT (app tracking transparency) introduced last year. The ATT enables iPhone users to stop Facebook from tracking them across the web to harvest data for targeted ads.

The Irish data regulator is currently investigating the matter while Meta waits for the final decision expected mid-year. But if a “good” solution is not found, Meta, which is currently struggling to stay afloat in the US, will suffer an existential crisis.

The Central Bank of Nigeria (CBN) has debited Zenith Bank, First City Monument Bank (FCMB) Limited and 11 other banks N356.1 billion for failing to meet its 27.5% Cash Reserve Requirement (CRR) obligation.

CRR is the minimum amount banks and merchant banks are expected to retain with the CBN from customer deposits.

Data made available by the CBN shows that Zenith Bank and Providus were debited N170 billion, N40 billion respectively, while FCMB was debited N39 billion, First Bank of Nigeria Limited N27 billion, Guaranty Trust Bank Plc N20 billion and Citibank N12 billion.

The details showed that Stanbic IBTC bank, Union Bank of Nigeria Plc and Polaris Banks were debited N10 billion each, Keystone Bank was debited N6 billion, Ecobank Nigeria N5 billion, Sterling Bank Plc, N3.6 billion, Fidelity Bank N2 billion and Nova merchant bank N 1.5 billion. Zenith Bank and Providus Bank were the most hit while Fidelity Bank Plc was the least debited bank by the CBN.

The CBN’s decision has not gone down well with stakeholders who lamented that it will affect their gain, especially as the CRR is at 27.5%.

The policy which was introduced in 2019, has seen yearly uptick. In early 2020, the apex bank’s Monetary Policy Committee (MPC) increased CRR by five per cent from 22.5 per cent to 27.5 per cent over its intention to address monetary-induced inflation whilst retaining the benefits of its 65 per cent Loan Deposit Ratio (LDR) policy.

The CBN governor Godwin Emefiele said at the end of January 2020, MPC, that the CRR initiative will help Nigeria to stem the high tide of inflation and keep low interest rates.

“The committee is confident that increasing the CRR at this time is fortuitous as it will help address monetary-induced inflation whilst retaining the benefits from the Bank’s LDR policy, which has been successful in significantly increasing credit to the private sector as well as pushing market interest rates downwards,” he said.

Analysts quoted by ThisDay, believe cash reserves are historically between 5% and 10% of LCY deposits. But the CBN is using the CRR as an instrument to keep inflation in check and to keep the exchange market stable, therefore it is expected to keep rising.

Analysts at Agusto & Co. In a report titled, “Economic outlook for 2022. Our storyline”, explained that: “At the end of 2021, mandatory CRR of banks stood at about 35% of LCY deposits.

“Historically, cash reserves were between five per cent and 10% of LCY deposits. In Ghana and Kenya, there are currently eight per cent and 4.25% of LCY deposits respectively.

“In addition to these mandatory CRR, Nigerian banks hold “special bills”, issued by the CBN, that bear interest at 0.5% per annum. These “special bills” are not easily convertible into cash and are, in substance, interest bearing cash reserves.

“We estimate that cash reserves (including interest bearing cash reserves) were about 50% of LCY deposits at the end of 2021. We do not believe that the CBN will reduce this ratio significantly in 2022, as it continues to see this as a major instrument for maintain “stable” exchange rates.”

Another analyst who weighed in on the matter, the Vice President, Highcap Securities Limited, David Adnori said the introduction of CRR is a drastic monetary policy to control money supply in the banking system.

“If CBN fails to maintain its CRR policy, so much money will flow into the market and further deprecates the naira. Generally, the policy has not favoured banks because the fund is not yielding any interest and of no benefit to the productive sector.

“These are funds banks lend to the real sector to drive business activities, finance working capital of the productive sector and boost GDP but the CBN is holding it down. It is not a good development for the nation’s economy in general.

“However, CBN has its reasons and releasing these funds might result in hyperinflation which can damage the nation’s economy. It is like a double edge situation- if you don’t do it, the economy is damaged and if you do it, the economy also struggles,” he said, adding that the only way CBN can cut CRR is when inflation dropped to a single-digit rate.

However, there is concern that the impact of the policy is not encouraging as the economy continues to wobble. Bank shareholders are worried that in the long term, the CRR will continue to affect their profit while doing a little to minimize inflation.

The National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu had stated that the 27.5% CRR has not also yielded the desired economic results after the first phase of Covid-19. He explained that the continuous debit of banks under CRR by CBN is putting the banking sector under serious threat and a compelling impotency toward sustainable intervention in the real sector.

“We urge CBN to seriously have a rethink on CRR and among other things to enhance the performance of the financial sector of the economy. The challenge character of Nigerian economy makes it imperative for CBN to pay interest on restricted deposits.

“Banks restricted deposits with CBN are idle funds. We argue that if these funds are with banks, certainly it will enhance their earnings, loans to real sector and returns for shareholders.

“If CBN can pay at least three per cent interest on the mandatory CRR deposits, it will go a long way in driving the real sector and the payment of robust dividends to shareholders,” ISAN said.