The Federal Reserve Bank of New York launched the New York Innovation Center (NYIC) to build and test new financial technology including central bank digital currencies (CBDC), stablecoins and cross-border payments, the central bank division announced Monday.
The NYIC is the result of a strategic partnership between the New York Fed and the Bank for International Settlements’ (BIS) Innovation Center. Jerome Powell, chair of the U.S. Federal Reserve, said the innovation center will foster collaboration and the sharing of expertise among central banks, during a virtual event marking the launch of the NYIC.
“In particular, the partnership will support our analysis of digital currencies, including central bank digital currencies, help to improve our current payment system, with a particular focus on making cross-border payments faster and less expensive,” Powell said.
According to the announcement of the launch, the NYIC plans to focus on five so-called opportunity areas: Supervisory and Regulatory Technology, Financial Market Infrastructures, Future of Money, Open Finance, and Climate Risk. The NYIC will be led by PricewaterhouseCoopers (PWC) alum Per von Zelowitz, who joined the New York Fed in July.
Zelowitz said during the virtual event that one of the five focus-areas, the Future of Money, relates to the center’s work on digital currencies. CBDCs are a critical area of focus, according to Zelowitz.
“But [this] could also include work specific to stablecoins and cryptocurrencies and other areas that might be relevant from our perspective,” Zelowitz said.
The NYIC will join the growing list of BIS innovation hubs, which already includes Singapore, Switzerland and Hong Kong. Earlier this year, the Hong Kong innovation center’s work on a prototype involving multiple CBDCs showed that digital currencies and distributed ledger technology could potentially facilitate cheaper and safer cross-border payments. Next year, 22 industry heavyweights including Goldman Sachs and HSBC will pilot this multi-CBDC platform (called the mBridge project) across multiple jurisdictions.
“The hub is not a think tank, it is a laboratory. It builds proofs-of-concept and prototypes using new technologies. It organizes hackathons to engage with the entire community, scout technologies and source ideas for projects,” said Agustín Carstens, General Manager at BIS during the event.
BIS plans to open more hubs in Canada and the euro system, Carstens said.