11. Rise of Decentralized Finance
Just as the 1970s financial deregulation and new banking tools transformed the financial landscape, the advent of blockchain and digital currencies is set to revolutionize money by bypassing traditional institutions. Digital Financial Services (DFS) leverage technologies like mobile devices and the internet to provide accessible and secure financial solutions, including e-money, digital wallets, and payment platforms. This evolution promotes financial inclusion by reaching underserved populations and drives innovation in the financial sector. The World Bank has been at the forefront of integrating digital technologies into financial services, aiming to enhance efficiency and accessibility. In October 2023, the World Bank issued EUR 100 million in Digitally Native Notes on Euroclear’s new Digital Financial Market Infrastructure (D-FMI) platform, utilizing distributed ledger technology (DLT) to improve transparency and reduce operational risks (worldbank.org). As decentralized finance continues to evolve, it is expected to reshape the global financial system, offering more inclusive and efficient financial services.
