Swiss National Bank Makes A Statement That Is Quite Promising For DeFi

The Swiss National Bank has made a statement in favor of decentralized finance (DeFi). According to the officials at the Swiss National Bank, the central bank’s digital currencies as well as the decentralized finance can work really well together.

The decentralized finance sector has great potential for expansion and adoption if the central banks decide to promote them. This is highly likely and may prove very beneficial for both sides.

Statement by Swiss Central Bank

According to the Swiss Central Bank, there is a positive side to decentralized finance technology if it works together with the central banks.

One of the Swiss National Bank’s (SNB) governing board members, Thomas Moser commented on the potential of digital currencies and the DeFi technology.

Moser stated that among the digital currencies, it is the central bank digital currencies that are promising to integrate with DeFi.

Their combination means that the users/clients would be offered stability as well as lower risks. The CBDCs have the ability to offer so much for the development of the decentralized finance sector.

Need for DeFi

Over the years, it has become clearer that the decentralized finance sector cannot survive long with cryptocurrencies.

This is because cryptocurrencies are not stable and have very high volatility. On the other hand, the central bank digital currencies are stable and risk-free making them adoptable without any hesitations.

The incorporation of decentralized finance technology and CBDCs would be the perfect combination. The users would benefit tremendously from the technology and the same could be expected for both sectors as well.

If the decentralized finance technology does incorporate the CBDCs and the central banks, then the technology would become highly profitable.

Significance of Centralized Stablecoins

Moser also talked about the significance of the USD Coin (USDC) and Tether (USDT) as stablecoins. He stated that the attribute that sets USDC and USDT apart from other stablecoins is that they are centralized.

A centralized and highly regulated stablecoin with stable and confirmed physical reserves backing their value adds tremendous value to DeFi.

They are the reason for increased adoption in the decentralized finance sector. Therefore, the cryptocurrency community must take inspiration from that and work with the central banks to promote decentralized finance.

As DeFi is already benefiting from the centralized tokens, then it wouldn’t be difficult for DeFi to work with the central bank’s digital currencies.

Future of DeFi

With the Swiss National Bank talking highly of the decentralized finance sector and its relation with the central bank, it is possible the respective bank may take an action in the particular space.

This would mean that the majority of the cryptocurrency industry would find itself connected with the central banks but they will be in control of their information.

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