On Friday, Federal Reserve Governor Christopher J. Waller spoke about whether DeFi is a substitute or complement to centralized finance. He concluded the two were complementary and also made positive statements about tokenization and stablecoins. Given these are his personal views, they don’t necessarily represent the Federal Reserve’s stance.
He noted that decentralized finance enables people to trade assets without giving up control of those assets to an intermediary. He considers yielding control of assets is a trademark of centralized finance.
At the same time, plenty of traditional financial institutions are also experimenting with DLT and smart contracts. One example is intraday repo trading using tokenization, where he sees the potential risk reduction from delivery versus payment. Another key benefit is the speed of settlement, which supports intraday transactions.
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