The Federal Reserve Bank of New York and the Bank of International Settlements have established a center to explore cutting-edge financial technologies and ways for supervision to keep pace with them.
The mission of the New York Innovation Center, which will be housed at the New York Fed, is to conduct research into emerging products and promote the development of technologies that central banks can use to regulate the modern global financial system.
Per von Zelowitz is the center’s director. Previously he was director of banking transformation at PwC and was a founding member of D10X, Citigroup’s corporate incubator.
The center will focus on five areas: supervisory and regulatory technology, including artificial intelligence; financial market infrastructures, including payments; the future of money; open finance, including banking as a service and decentralized finance; and advanced analytics to assess the risks and costs of climate change.
“The goal is to not just write down ideas but develop them, turn them into practice, experiment and see what works,” John Williams, president of the New York Fed, said at a virtual launch event on Monday.
The BIS is owned by 63 central banks and based in Basel, Switzerland. Its innovation hub centers are in Hong Kong, Singapore, Switzerland, London and Stockholm, with two more centers planned for Toronto, Frankfurt and Paris. One project that the BIS recently announced, Nexus, will examine how to adapt instant payment systems within countries to facilitate speedy transfers across international borders.
“Linking up with the BIS in this way will enhance our ability to collaborate with central banks around the world and will ensure that the best and most up-to-date information, research, and practices are flowing freely,” Federal Reserve Chairman Jerome Powell said in opening remarks during the event. He has served as head of the BIS Innovation Hub Advisory Committee since it formed in January 2020.
The center's pursuits will remain agile, said von Zelowitz. “It’s highly likely these will evolve over time,” he said.
Other Federal Reserve units have established their own innovation projects. The Federal Reserve Board’s Technology Lab, or TechLab, conducts research about payment technologies. In 2020, the Federal Reserve Bank of Boston announced a multiyear collaboration with the Massachusetts Institute of Technology to explore
