BIS managing director: 'DeFi' promise of decentralization is an illusion

Advocates of a decentralized future of money based on distributed ledger technology are chasing an illusion, Bank for International Settlements (BIS) managing director Agustin Carstens said at an event in Frankfurt on January 19. Their vision is to "democratize finance" by cutting out big banks and other middlemen, but "that's not what decentralized finance applications offer." “In reality, there’s a lot of centralization in decentralized finance,” Carstens said. That’s because self-executing protocols, or “smart contracts,” don’t cover every possible situation, relying on individuals to write and update code. In addition, certain features of DeFi favor the concentration of decision-making power in the hands of large token holders.