As part of the introduction of its New York Innovation Center, the Federal Reserve Bank of New York has announced a partnership with the Bank for International Settlements Innovation Hub. The effort is targeted at investigating technology used to develop the global financial system.
Federal Reserve chair Jerome Powell said the alliance will help the agency’s examination of digital currencies, including the launch of a central bank digital currency, or CBDC, in a speech at the New York Innovation Center on Monday. The center intends to fund research into how to improve cross-border payment systems.
“The pace of technological change and innovation over the last decade has led some to argue that we are on the brink of a fourth industrial revolution — a digital revolution,” said Powell. “Certainly, rapid innovation, including through the application of advanced digital technologies, machine learning, artificial intelligence, and big data, is revolutionizing the financial sector.”
The innovation center will be led by Per von Zelowitz, a former PwC director of banking transformation. BIS Innovation Hubs, which have facilities in Hong Kong, Singapore, Toronto, London, Stockholm, and other cities, have supported certain research projects targeted at integrating CBDCs with other countries’ payment systems as well as other central bank infrastructure. According to a January BIS study, 86 percent of major central banks were actively considering introducing CBDCs.
Powell made his remarks as he anticipates a Senate Banking Committee hearing on his candidacy for a second term as Fed chairman. In September, he stated that the Fed was “working proactively to issue a CBDC,” but that a blanket ban on cryptocurrencies was improbable.