BIS and the FRB of New York test financial technologies

The Federal Reserve Bank of New York has opened the New York Innovation Center (NYIC) to create and test new financial technologies, such as stablecoins and central bank digital currencies (CBDC).

According to Jerome Powell, a member of the Federal Reserve Board of Governors of the US, the innovation center will facilitate the interaction and the sharing of experience among central banks. Powell stated that NYIC will deal with the analysis of digital assets, including central bank digital currencies. In addition, the new center will help to improve the payment system and speed up international payments. Recently Eric Adams, the mayor of New York,  said that he plans to turn his city into the cryptocurrency hub.

Powell also said that the FRB is actively working on the launch of CBDC, but at the same time it is not going to support the ban of cryptocurrencies. The bank’s experts believe that in the future digital currencies will be able to compete with the dollar for dominance in the global financial system.

NYIC was created with the help of the Bank for International Settlements’ (BIS) Innovation Center. Its activities will focus on the development of such areas as the future of money, supervision and regulatory technologies, climate risk and financial market infrastructures.

The center will be led by Per von Zelowitz, the former director of PricewaterhouseCoopers (PwC) for the banking transformation. He noted that NYIC will give priority to working with CBDC, but also will test other digital assets. BIS recently published a report that describes the problems related to digital currencies and stablecoins.

The Bank for International Settlements has already opened innovation centers in Hong Kong, Switzerland and Singapore. BIS General Manager Agustin Carstens said that the bank plans to create a few more centers in Canada and on the territory of the EU.

Research conducted by the Hong Kong Center has shown that digital currencies and distributed ledger technology could potentially reduce the cost of international payments and make them more secure. Next year, 22 banks, including Goldman Sachs and HSBC, will test the new technology using several CBDCs. According to the BIS survey, more than 80% of major banks in the world are considering the introduction of CBDC.