From distributed ledger to AI payments, Federal Reserve Chair nominee Waller calls for innovation and regulation to go hand in hand
Federal Reserve Governor Christopher Waller called on U.S. regulators to embrace new technologies, emphasizing their benefits for financial firms and consumers, while also establishing necessary regulatory measures to ensure safety. In his speech at the Sibos conference in Frankfurt, he pointed out that decentralized financial technology can complement traditional payment systems, and distributed ledger technology can improve the efficiency of fund transfers. He mentioned that diversified options help achieve public policy goals and announced that the Federal Reserve will hold a payment innovation conference on October 21, urging policymakers to collaborate with the industry
According to the Zhitong Finance APP, Federal Reserve Governor Christopher Waller stated that U.S. regulators should welcome the various benefits that new technologies bring to financial firms and consumers, while also establishing necessary regulatory measures to ensure safety.
In a speech prepared for the Frankfurt Sibos conference on Monday, Waller said, "As we move into the next realm, let us remember that this is not a brand new story; we should not fear new technologies, nor should we fear new service providers."
He added that banking regulators should consider how to leverage new technologies to enhance key components of the global financial system infrastructure, "while ensuring that these improvements maintain and enhance the system's safety and stability."
Waller has long called for central banks to embrace the "technology-driven revolution" in artificial intelligence and tokenization to improve payment systems.
He emphasized that certain technologies in decentralized finance (including those supporting virtual currencies) complement traditional payment systems and pointed out that distributed ledger technology offers a more efficient and faster way to transfer funds and assets.
On Monday, he reiterated this point and stressed the need for more options in payment infrastructure, including so-called distributed ledger technology, which enables instant, continuously available transactions, record-keeping, and data management.
Waller stated, "Having multiple options also helps achieve public policy goals, such as enhancing the resilience of the entire payment system." He also added that expanding the range of choices would help the U.S. maintain a leading position in the next frontier of payment innovation.
He mentioned that companies should be able to choose to transfer funds or securities through different channels based on their business needs, as some businesses may prioritize speed, while others may prefer the ability to process payments in bulk and settle net amounts to save on cash flow costs.
Waller announced that the Federal Reserve will hold a payment innovation conference on October 21, and he again called for policymakers to establish partnerships with the industry, urging advocates to "collaborate on standards, cybersecurity, and risk management to ensure that innovation and safety go hand in hand."
Waller was appointed to the Federal Reserve by former President Donald Trump in 2020. He is expected to succeed Jerome Powell when Powell's term as Fed Chair ends in May next year. Waller did not discuss the economic outlook or monetary policy in his prepared remarks
