intraday credit / repo, because it obliged participants to use their own liquid funds rather than rely on central bank intraday credit ( which was actually overnight credit ). for example, maximum intraday credit extended to niss participant was about 14 percent of the settlement value in june 2003 ; this ratio has come down to about 6 percent in april this year. these reforms were mainly meant to improve the ability of the central bank to manage the liquidity of the monetary system and to manage risk exposures. let me now turn a few further reforms that the bank of namibia is currently envisaging. 4. bank of namibia ’ s proposed accommodation policy mr. chairman, i would like to turn our attention to bank of namibia ’ s accommodation policy, since i regard this as an important component of monetary policy. a central bank could provide credit facilities as part of its payment services, especially in connection with large value transfer systems, to facilitate a smooth flow of settlement in the payment system. but, the central bank will not want these credit operations to reduce its control over liquidity and monetary management. it will also want to avoid becoming lender of first resort for market participants. on the contrary, it would want to foster the development of private money markets, including those for intraday funds. moreover, in granting credit, a central bank will typically wish to use both prices and objective rationing criteria comprising ( i ) observance of regulatory and supervisory norms, ( ii ) provision of collateral, and ( iii ) requirements for borrowers ’ capital. our new policy focus is for the bank to provide liquidity to banking institutions through four different facilities, each with different terms and conditions. these facilities are the intraday repurchase agreement, the seven - day repurchase agreement, the marginal lending facility, and lender of last resort. since the lender of last resort would be highly discretionary, i will focus more on the other three. before i move on to explain how the facilities are applied, let me explain the underlying principles of our accommodation policy : • the bank recognises its distinct role of short - term liquidity provider to niss participants with a view to enhance timely and smooth settlement. this role should, however, not interfere with the bank ’ s monetary policy or liquidity management roles. • in the same vein, the bank should guard against perpetual lending as this could bleak the view on financial soundness of banking institutions. for this reason, any lending to banking institutions

christopher j waller : centralized and decentralized finance substitutes or complements? speech by mr christopher j waller, member of the board of governors of the federal reserve system, at the vienna macroeconomics workshop, organised by the institute of advanced studies, vienna, austria, 18 october 2024. * * * thank you for inviting me to speak today. 1 i have participated in this conference for nearly 20 years and have often presented my research on monetary theory, banking, and payments. so, i believe this is the right audience to speak to regarding the role of centralized finance and the emergence of decentralized finance, or defi for short. over the past few years, there has been a lot of attention and work on defi, which will be a major focus of my remarks. many argue that defi will replace traditional centralized finance while others argue that it merely extends traditional finance methods and trading activities onto new platforms. it is in this sense that i want to address the question of whether centralized finance and defi are substitutes or complements to each other. advances associated with defi have the potential to profoundly affect financial market trading. while i believe these advances could lead to efficiency gains, i recognize the significant value that has been delivered for centuries by financial intermediaries and through centralized financial markets. before i share my views on the promise of these new technologies, let me tell you where i'm coming from on these issues. i am an economist, and so my first inclination is to think about the underlying economics driving an issue. but to understand the value proposition of defi, it is useful to first recall why centralized financial market trading arose in the first place. centralized finance clearly provides benefits to people, but obviously also comes with some costs. i am going to take a few minutes to discuss those benefits and costs before turning to the question at hand. let's start with the economics of trading. most financial trades are " pairwise " in that the seller of an object needs to find a buyer of that exact object. the problem is that it is often complicated, costly, and time - consuming to search for a buyer. this gives rise to the need for someone to step in and help buyers and sellers match in a faster and less costly manner. in short, there is a profit opportunity for someone to intermediate the trade. another name for intermediaries is middlemen. why would we pay a middleman? in their paper from nearly 40 years ago, ariel ruben