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The president of the Federal Reserve Bank of New York called on banks to prepare for the upcoming fundamental transformation of digital payments and closely monitor the consequences of technological transformations.
Speaking at a seminar on the implementation of monetary policy, the President of the Federal Reserve Bank of New York (FRB) John C. Williams (John C. Williams) drew the attention of colleagues that the banking industry needs to prepare in advance for fundamental changes related to the consequences of the use of crypto assets and the introduction of digital currencies of central banks (CBDCs).
“Thanks to technological transformations, the financial world is changing radically. This opens up opportunities to do many things faster and more efficiently. The rapid development of digital currencies, including cryptocurrencies that are backed or not provided with safe and liquid assets, as well as CBDCs, can become a new way to store money and make payments. While innovation opens up new opportunities, it also carries risks to be prepared for,” Williams said.
The head of the Federal Reserve Bank urged colleagues to understand how these transformations can affect the economy and the financial system, as well as the implementation of monetary policy and the balance sheets of the Central Bank. In addition, he recommended that representatives of the banking industry carefully consider steps to properly regulate the circulation of digital currencies to protect the rights of consumers and investors, as well as ensure the stability and security of the entire financial system.
In February, analysts at the Federal Reserve Bank of New York published a report suggesting that the use of digital assets in the traditional banking system could lead to a shortage of safe and liquid assets.
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