Systemic Security

Definition ∞ Systemic security refers to the overall resilience and stability of an entire financial system or a large-scale network against widespread disruptions or failures. It involves measures designed to prevent a localized issue from cascading into a broader crisis that could impact numerous participants. This concept considers the interconnectedness of various components and aims to protect the system as a whole. Ensuring systemic security is a primary objective of financial regulators.
Context ∞ In the context of digital assets and decentralized finance (DeFi), discussions around systemic security are becoming increasingly important due to the rapid growth and interconnectedness of these markets. A key debate involves assessing whether the failure of a major stablecoin or DeFi protocol could pose risks to the broader financial system. Future developments will likely focus on regulatory oversight, stress testing, and the implementation of robust risk management frameworks to safeguard the stability of the evolving digital financial landscape.