The regulator will conduct research and engage with innovators in the industry
The Federal Reserve is exploring new payment technologies, including tokenization, smart contracts, and AI, to support innovation and enhance its platforms.
Governor Christopher Waller said that, as a payment system operator, the Federal Reserve must track trends in payments technology to support private sector firms using its infrastructure and to assess whether emerging technologies could enhance its platforms and services.
He added that the Fed could gain from closer engagement with industry innovators to better understand emerging technologies and their potential to enhance payments, especially as the traditional financial sector and the digital asset ecosystem increasingly converge.
The decision to research and engage with innovators comes as Waller highlighted the benefits of using emerging technologies to develop new payment services.
Waller said: “The payment system is experiencing what I have called a ‘technology-driven revolution,’ where the latest advances in computing power, data processing, and distributed networks have fueled growth in innovative new payment services.”
“Alongside these new services sits enabling technology, such as artificial intelligence (AI), that has the potential to improve the precision and efficiency of the underlying payment products even further.”
While Waller acknowledged the skepticism surrounding innovation in the payments industry, he noted that using technology to develop new payment services is not a new concept. Therefore, he emphasized that both the private and public sectors can embrace innovation within their respective roles.
