The Bank for International Settlements (BIS) released a new working paper titled “The Technology of Decentralized Finance,” discussing DeFi as the new financial paradigm this week. It discusses the emergence of DeFi, which has seen rapid growth in recent years, and how it can interoperate with traditional finance.
Headquartered in Basel, Switzerland, BIS is an international financial institution that provides central banking services to its member banks and promotes global monetary and financial stability. It also acts as a clearinghouse for international payments.
According to the report, DeFi integrates technical, financial, and socio-economic complexity in an unprecedented way. It also states that this development could be neglected while DeFi was still a niche phenomenon without ties to the fiat system.
However, with the increasing integration of crypto assets with the traditional financial sector, BIS says novel methods are required to identify, investigate, and ultimately understand the risks associated with these developments. The scientific method embedded in a…
