Fed’s Powell Says New Innovation Hub Will Help Central Bank Improve Payments

Jerome Powell waits to testify before the Senate Banking, Housing and Urban Affairs Committee on his nomination to become chairman of the U.S. Federal Reserve in Washington on Nov. 28, 2017. (Joshua Roberts/Reuters)

The New York Federal Reserve launched a new innovation center on Monday that will support the central bank as it explores the possibility of a digital currency and tackles other issues such as financial market infrastructure and regulation.

The center, in partnership with the Bank for International Settlements (BIS) Innovation Hub, will help the central bank improve the current payments system, Fed Chair Jerome Powell said in remarks prepared for a virtual event on Monday.

“In particular, the partnership will support our analysis of digital currencies—including central bank digital currencies,” said Powell, adding that the center would focus on making cross-border payments faster and less expensive and provide new tools to help supervise financial firms.

The Fed is in the process of exploring whether it should launch a digital version of the U.S. dollar, and the Fed board is working on a discussion paper that would explore the policy issues surrounding a central bank digital currency.