© Reuters. FILE PHOTO: 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, U.S., November 28, 2017. REUTERS/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, assesses the financial risks associated with climate change 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.
Powell did not comment on his outlook for the economy or monetary policy in his remarks.
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.
Researchers at the New York Fed have also developed an approach to measuring banks’ exposures to climate-related risks, potentially an early step toward assessing whether financial institutions have enough capital on hand to withstand them.