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A member of the Executive Board of the German Central Bank responsible for banking supervision and IT has called for the creation of a separate global regulatory body for decentralized financial business projects.
Joachim Wuermeling recommended setting international standards in banking for innovation in financial technology, criticizing decentralized finance (DeFi). Würmeling called for a discussion on how to deal with the fast-growing segment of blockchain-based finance, which he believes could lead to the disappearance of traditional banks.
“For me, DeFi is more like a casino for tech-savvy speculators,” said a member of the executive board of the Central Bank of Germany.
He added that DeFi “is growing rapidly, as are its links to the rest of finance and economics. Therefore, regulatory options need to be discussed now, since “there are still too many obstacles that need to be overcome” for the technology to become mainstream.
“I can imagine a global forum like the Basel Committee on Banking Supervision that could set global ground rules for digital innovation,” Würmeling said, referring to the international organization that sets the rules for traditional lending institutions such as Deutsche Bank or JPMorgan.
The official acknowledged that “digitalization knows no boundaries” and advised regulators to coordinate their actions when developing oversight rules. The statement by a member of the executive board of the German Central Bank was a response to the call of the international organization Financial Stability Board (FSB) to develop new rules for the crypto industry and a fierce debate on how to properly regulate financial services that are not controlled by some single organization.
Recall that the international community Web3 and several dozen crypto companies signed an open letter to EU regulators calling for “reasonable regulation” to the industry.
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