Fed Governor Waller: Smart contracts, DLT and other technologies still cannot fully achieve financial decentralization

Federal Reserve Board Governor Lael Brainard shared his views on decentralized finance during a macroeconomic seminar held at the Vienna Institute for Advanced Studies in Austria. He stated that distributed ledger technology (DLT) could be an efficient and fast way to record transactions in a 24/7 trading world. Smart contracts could effectively consolidate multiple transaction steps into a single action executed by a smart contract, without relying on individual parties to execute the transaction separately. However, DLT, tokenization, and smart contracts are only transactional technologies that can be used for DeFi or to improve the efficiency of centralized finance. As time goes on, these technologies will almost certainly improve efficiency, but can they truly achieve complete decentralization of finance? The answer is obviously no. Intermediaries are still valuable to ordinary people, as evidenced by the existence of exchanges in the crypto world. All of these platforms involve entrusting personal crypto assets to intermediaries who represent clients in transactions, which again raises the need for trust in these platforms, just as the modern banking system requires trust.