When autocomplete results are available use up and down arrows to review and enter to select.
Federal Reserve Governor Michelle Bowman said regulators need to understand emerging technologies such as artificial intelligence, blockchain, and tokenization, including how they may be used in the financial system and who has the ultimate responsibility over them.
Details: Speaking in Austria at a financial technology seminar, Bowman said regulators must understand the consequences of specific innovations, citing the increasing interest in tokenization. Bowman warned that tokenized products and platforms could duplicate existing bank deposits and payment rails with fewer legal protections for consumers and the financial system, potentially creating parallel systems.
Conclusion: Bowman noted that the goal of financial innovation is to integrate the new technology into the fabric of the financial system. To do so in a responsible way, she said, “we need to understand the effects the technology will have, including the risks and consequences of introducing it.”
Background: A tokenized deposit is a digital representation of a bank deposit with programmable capabilities. The New York Fed Innovation Center is serving as an observer for Project Agorá, a large industry experiment to test whether tokenized deposits can improve cross-border payments. Earlier this year, Bowman expressed skepticism about technology being able to improve all frictions in cross-border payments.
ICBA View: ICBA supports global efforts to advance international crypto asset regulation, including the International Organization of Securities Commissions’ baseline policy recommendations. It also has repeatedly expressed opposition to the creation of a U.S. central bank digital currency, requesting from U.S. agencies federal records on whether legislative changes are required to issue a U.S. CBDC.