Federal Reserve Gov. Christopher Waller said the central bank should be open-minded toward technological innovation, specifically in the payments space.
During an onstage appearance at the Wyoming Blockchain Symposium Wednesday morning, Waller said a "technology-driven revolution" is underway, fueled by private sector inventions such as mobile payment apps, stablecoins and other digital assets.
He added that skepticism toward modernization in payments is misplaced, noting that "the evolution of the payment system has long been a story of technological advancement." And pointed to the "complementary roles" the private sector and the Federal Reserve have in the space.
"Much of this evolution has been led by private sector innovators. Key components have been supported by the Federal Reserve," Waller said. "These complementary roles have led to a U.S. payment system that operates safely and efficiently and serves as a backbone for commerce in the U.S. and globally."
"That is why it is important for the Federal Reserve to continue to embrace technological advancements to modernize its services and continue to support private sector innovation," Waller added.
During his speech, Waller, who serves as the Fed board's oversight governor for reserve bank operations and payment systems, said
"There is nothing scary about this just because it occurs in the decentralized finance, or DeFi, world — this is simply new technology to transfer objects and record transactions," Waller said. "There is nothing to be afraid of when thinking about using smart contracts, tokenization, or distributed ledgers in everyday transactions."
He also
"Stablecoins, like card payments, are a private sector-driven innovation. And, like card payments, we see connections to the traditional payments, clearing, and settlement ecosystem," he said.
Waller said that in light of how interconnected the traditional financial sector and the digital asset ecosystem have become, "the Federal Reserve could benefit from further engagements with innovators in the industry."
"We are working on ways to further that engagement, so stay tuned," he added.
Waller's comments come as the
She warned that if regulators are not open-minded about technology adoption, "banks will play a diminished role in the financial system more broadly."
Bowman also floated the idea of allowing Fed employees to hold a small amount of crypto as a means to better understand how digital assets work, something that has been restricted since 2022.
"I certainly wouldn't trust someone to teach me to ski if they'd never put on skis, regardless of how many books and articles they have read," she said during her speech. "We should consider whether limits on staff investment activities may be a barrier to recruiting and retaining examiners with the necessary expertise and for existing staff to better understand the technology."
