* CBDCs could spark wave on non-bank payment firms * But Big Tech payment offerings risk stifling competition LONDON, March 31 (Reuters) - Central bank digital currencies could spark a wave of new, non-bank players in retail payments and shake up the sector, the Bank for International Settlements said on Wednesday. Major central banks have stepped up efforts to develop their own digital currencies, known as CBDCs, to modernise financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments. Most efforts are still at the drawing board, with the Bank of England among those urging collaboration with the private sector. The People’s Bank of China’s plans for a digital yuan are the most advanced. “One goal is to build an infrastructure that allows for more competition, which may mean more payment providers,” said BIS General Manager Agustín Carstens in a speech in Basel. “One outcome is that a flood of new players could ‘disrupt markets’,” he said, according to a text of his remarks. The prospect of billions of people across the world using the planned Facebook-backed Diem, formerly Libra, has spooked central banks about the potential risk to financial stability and their control over monetary policy. Diem is a so-called stablecoin, a type of cryptocurrency designed to avoid the volatility typical of digital tokens such as bitcoin and thus become more practical for payments and commerce. Big tech payments services, convenient for users, could quickly come to dominate and stifle competition as well as undermining data protection, said Carstens. “These walled gardens risk undermining the benefits that competition brings to financial services,” Carstens said. “Risks could be especially large for big tech-backed stablecoins.” Britain’s financial services minister said on Tuesday it would focus regulatory attention on stablecoins before the broader cryptocurrency market, citing the threat to competition should any major private effort dominate the emerging field.