DeFi ‘Crucial’ for Financial Inclusion, CBDCs Still Welcome Despite Being Centralized
Decentralized finance (DeFi) protocols are “crucial” for financial inclusion, particularly in the developing world. And despite being inherently centralized, central bank digital currencies (CBDCs) are a welcome part of that, said the participants at a discussion hosted by the Bank for International Settlements (BIS).
Speaking at the BIS’ DeFi 22 conference on Monday, Jan Brzezek, CEO & founder of Crypto Finance, described DeFi as “crucial” in today’s ultra-low interest rate environment, and said it is particularly important for people who are left behind by the traditional financial system.
This includes people who can utilise DeFi solutions to get a loan for just small amounts of capital, or can lend money to others and get a yield on it, Brzezek said, while rejecting a commonly held notion that DeFi is mainly used for speculation.
This view was shared by fellow panelist Evan Van Ness, a technologist and investor in Web 3 technology at Starbloom Ventures, who called the technological progress seen in the crypto space “unstoppable.”
The comments from Van Ness came after he was asked by the panel discussion’s moderator, BIS researcher and economic advisor Hyun Song Shin, why it wouldn’t be better to just improve on the current system rather than designing an entirely new decentralized financial system.
Access to DeFi and digital dollars can be a “life and death” issue for people in countries without stable banking systems, Van Ness said.
He added that these are countries where people have been robbed of their savings through inflation, corruption, and incompetent governance for decades before technology finally offered a solution to the problem.
As an example, Van Ness said working class people in Argentina, a country he said he has spent a lot of time in, typically buy the stablecoin USDC to protect against the high inflation there. “They like to use DeFi,” he said.
And while Van Ness argued that DeFi is popular in Argentina, he also said central bank digital currencies (CBDCs) would be “great,” adding that he thinks they are “inevitable” because “technology always wins.”
“People in Argentina will love to have a Swiss National Bank franc […] they would love to be able to use that,” Van Ness said, referring to a potential digital version of Switzerland’s fiat currency.
People in Argentina already have “religious faith in the dollar” due to the high inflation that the country has been known for, Van Ness further said, before adding:
“But if they can get the franc – the franc has a long history of stability – then I think they would like that too.”
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