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 technologies used to enhance the global financial system.
Federal Reserve chair Jerome Powell stated the collaboration would help the agency’s analysis of digital currencies, such as the deployment of a central bank digital currency, or CBDC, in a speech at the New York Innovation Center on Monday. In addition, the center intends to fund research on how to improve overseas payment systems.
Some believe that we are on the verge of a fourth industrial revolution — a digital revolution, Powell added, citing the rapid speed of technological progress and invention over the previous decade. He also added that technological growth is transforming the finance system, including applying advanced digitalization, machine learning, artificial intelligence, and big data.
The innovation center will be led by Per von Zelowitz, a former PwC director of banking transformation. BIS Innovation Hubs, which include facilities in Hong Kong, Singapore, Toronto, London, Stockholm, and other cities, have funded research projects targeted at integrating CBDCs with other nations’ payment systems and 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 moving aggressively to release a CBDC, but a blanket prohibition on digital currencies was improbable.