DeFi could improve payments and settlement – BoC research

Inefficient legacy systems hamper the smooth completion of these operations

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Bank of Canada (BoC) researchers think decentralised finance (DeFi) systems pose limited risks to financial stability and the real economy.

Use of smart contracts as third parties in DeFi systems “eliminates the incentive problems that a traditional intermediary might face”, say Jonathan Chiu and Hanna Yu in a research note published by the BoC on October 17.

Chiu is a senior research adviser at the central bank; Yu is a PHD student at the University of California, Berkeley and a research

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