Defi brings challenges to existing financial system, but it also calls for some deep thinking about existing economic and financial system.
1. Should intervention be appropriately reduced?
The original intention of official intervention is to promote the development of the entire economic and financial system, but when government / authority intervenes too frequently in financial and economic development, the reality often goes against expectations, and even leads to “financial suppression”. The so-called financial suppression refers to government’s excessive intervention in financial activities and system that inhibits the development of financial system, financial system lags behind and then hinders economic development, leading to a vicious circle of financial repression and economic backwardness.
This phenomenon is not uncommon. There are lots of human intervention methods in existing financial system, such as financial policies and financial instruments including interest rates and exchange rates.
In fact, economic development is the premise and foundation of financial development, and financial development should only be an auxiliary power and tool for economic development. Obviously, excessive intervention brings no good to financial development, but indirectly brings a negative inhibitory effect on the economy.
DeFi financial system, like Bitcoin encrypted digital currency, is in a non-intervention state. Although it develops too fast to be accepted and it cannot be updated quickly in the short term, it points out a clear direction. DeFi tells us that maybe the new financial system should have less human intervention and more rule-based autonomy, and adapt financial instruments to the market, not the other way around.
2 .Should financial business granularity be finer?
For various reasons, traditional financial services have a coarse granularity of business services. Financial institutions, such as banks, generally value large customers and large fund businesses, while ignoring small, medium and micro customers. The reasons include the preference of executive agencies and the restrictions of macro-policies. For bank clerks in charge of lending business, they prefer large and reputable enterprises such as central enterprises and state-owned enterprises. Those enterprises have large amount transactions, strong risk control capabilities, yet its operation cost is no higher than smaller customers, therefore clerks cannot be motivated to serve smaller customers. Another example, policies stipulate a threshold for a qualified investor, this is to protect small and micro investors. This will undoubtedly block out many small and micro investors with financial needs but limited assets.
From this point of view, the granularity of financial services is still not fine enough at both Business end and Consumer end. As a result, small Business and small Consumer cannot enjoy the same financial services and rights. With the increasing awareness of civil rights, financial services rights will become increasingly important, and this trend is irreversible.
At the national level, one of the real problems in providing better services for small, medium and micro enterprises may be the granularity of financial business services.
In DeFi, financial services granularity can be fine enough that people can invest even $1.00 or less, and the corresponding small asset holder can theoretically borrow the same amount of funds that he holds.
