DeFi is booming and the FTX_Official exchange collapse has thrown a spotlight on the urgent need for safer, more efficient systems in crypto. MoodysAnalytics Yiannis Giokas explores how to meet this challenge through CBDCs and fiat-backed stablecoins.
Decentralized finance is booming, and the FTX exchange collapse has thrown a spotlight on the urgent need for safer, more efficient systems in the crypto market. So how can governments, financial institutions and DeFi-native groups meet this challenge?
All three instruments can harness blockchain technology, paving the way for faster and more efficient transactions. They share the potential to increase accessibility and financial inclusion, particularly for underbanked or unbanked populations. Each instrument is designed to provide stability, whether backed by a central bank , deposit protections or underlying fiat currency reserves .
So, can CBDCs, tokenized deposits and stablecoins coexist within the DeFi landscape? Governments, financial institutions and stablecoin issuers are each focused on developing their own instruments and must adapt their strategies to successfully coexist.
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