The relationship between DeFi and monetary policy

Analysts at Bloomberg Economics have noticed that the Group of Seven (G7) countries tend to similarly tighten their monetary policies. The study found that central banks are eliminating assets and raising interest rates. In the past, the US Federal Reserve was the only central bank to lower its balance sheet; this time, however, other central banks may do the same. In order to combat growing inflation, the world's central banks had been planning to reduce the size of their balance sheets by as much as $410 billion as of 2022. However, the cryptocurrency markets may struggle to adjust to the new realities of monetary policy, which could result in a decrease in market values as a negative side effect of this decision.

The potential impact of a change in monetary policy on DeFi

Central banks are giving up on quantitative easing to fight inflation; still, the financial markets are feeling the pain of the change. "This is a major financial shock for the world," said Alicia Garcia Herrero, he…