The current president of the Bank for International Settlements (BIS), Agustín Carstens, considers the decentralization offered by decentralized finance platforms (DeFi) an illusion, and considers it imperative to demand a regulatory framework to protect clients.
In a interview for the news portal CNBC this December 7, Carstens communicated that it is concerning the concept of decentralization of platforms DeFi. “What we found is that the decentralized aspect tends to be illusory,” he said.
For the BIS, the DeFi should be regulated to protect investors against possible crises such as lack of liquidity, and “increase confidence in the market.”
In this sense, it should be noted that the BIS is a bank that acts as an “umbrella” or lifeline for the central banks of the countries that comprise it.
For the manager, current concerns about DeFi have been contained, however, in the future “the growth of this type of platform raises financial stability concerns.”
What Carterns proposes is a safe investment environment where traditional central banks have control over operations. A DeFi platform, offers financial products without intermediaries, becoming a direct competition against the banks.
According to Data from DappRadar, there are currently more than $ 1.4 billion locked on DeFi platforms. Quite a significant number, and which explains Carstens’s views on the “DeFi regulation.”
Carters does not specify what the regulation should focus on. Although he expresses his concern about the different vulnerabilities present in this platform, everything seems to point to a control regulation. This is because last year, Carstens mentioned that “with a digital currency the central banks will have absolute control” as reported by CriptoNoticias.
DeFi worries about not being controlled
DeFi exists in a decentralized environment, where it is the community that makes and manages the decisions. Although Carsten points out that this is an “illusion”, this type of organization cannot be controlled by a centralized entity. As the CriptoNoticias Criptopedia explains, these platforms range from loan platforms, predictive markets, decentralized exchanges (DEX), stablecoins and even tokenized stocks.
Central banks are in charge of controlling the currency and dictate the monetary policies of each country. In this case, a DeFi cannot be regulated as it does not belong to any issuing entity. It does not physically exist in any country.
Carsten previously has already stated on other occasions its position in favor of control which, in his opinion, should be exercised by central banks for financial control or stability.
In a seminar given last January, the executive commented that central banks are the only ones who can “stabilize the value of digital currencies, ensure the elasticity of the aggregate supply of said money, and guarantee the supervision and security of the operation of the bank. system”. He said this in support of the launch of central bank digital currencies, or CBDCs.