Benoit Coeuré, Bank for International Settlements official and former member of the European Central Bank’s board of directors, said in a recent speech at an EuroFi event that stablecoins and DeFi in general were ‘challenging banks’ business models’ and authorities had to work on creating official digital assets quickly, highlighting growing fears in traditional financial circles over the boom in digital assets.
According to Coeuré, both stablecoins and decentralized financial firms pose a threat to depositories and banks:
“There is work to be done — providing price stability and financial stability — and they must retain the ability to do that. You have to act while the current system is still in place — and you have to act now. The time has passed for the central bank to move. It will take years for the central bank’s digital currency to roll out, but stablecoin and crypto assets are already here. This makes the start even more urgent.”
Central banks must consider the role of commercial banks in the system
He added that regulators and central banks should take into account the role that banks will play after central banks start issuing digital currencies, the impact of these new assets, and the role of mediators in the digital financial system. While central banks accept the role of traditional financial companies in new digital asset infrastructure, the challenge remains:
“But there is no mistake. Global Stablecoin, DeFi platforms and big tech companies will challenge regardless of the banking model.”
So will stablecoins and DeFi destroy finance as we know it? Yes, and that’s not a bad thing according to Rafael Cosman, Cofounder and CEO of Trust Token, a platform to create asset-backed tokens:
“Just like how the internet did not so much ruin as transform news, DeFi is a transformation in finance. DeFi is doing the same (as the internet did for news) for money and investment opportunities. Why should you have to pay 30 $ for an international bank wire that’s going to take 2-5 business days to arrive? Why should it be any harder, slower, or more expensive than sending an email?”
Emerging models inevitably disrupt old ones
According to Cosman, emerging business models will certainly disrupt old ones:
“They have been trying to regulate an overly complex financial system for decades to give consumers the trust and transparency they want. When has anyone ever built a financial system where every transaction is completely public and auditable 24/7? When I put my money in a bank, I know next to nothing about what they are doing with it. When I put my money in a DeFi protocol, I can literally watch it 24/7, see exactly what it is doing and why.”
The post Trust Token CEO: ‘DeFi is a transformation in finance’ appeared first on Invezz.