US Federal Reserve Bank of St Louis seems to have grasped DeFi with both hands

On 5 February 2021 the US Federal Reserve Bank of St Louis issued an excellent report titled 'Decentralized Finance: On Blockchain- and Smart Contract-Based Financial Markets'.


For executives currently at Management or Board level within a regulated financial institution this paper is a must read. DeFi and it's implications are a fairly complicated topic but vitally important to understand as the projects in this space will become the infrastructure for the new financial system being built on protocols such as Ethereum and Bitcoin.


It is somewhat of a pleasant surprise to me that one of the most influential Federal Reserve Banks in the US has taken the time to properly research and understand this space and then set out the benefits of the technologies and how they may not just improve but replace existing financial infrastructure. It is a very positive paper.


The paper notes that :


'The spectacular growth of these assets alongside some truly innovative protocols suggests that DeFi may become relevant in a much broader context and has sparked interest among policymakers, researchers, and financial institutions. This article is targeted at individuals from these organizations with an economics or legal background and serves as a survey and an introduction to the topic. In particular, it identifies opportunities and risks and should be seen as a foundation for further research.'


The full paper can be found here.




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