tl;dr
Fed Governor Christopher Waller discusses the future of payments, emphasizing innovation, stablecoins, and the need for regulation to balance efficiency and security.
**Fed Governor Christopher Waller Emphasizes Innovation and Regulation in Shaping Future Payments**
At the Sibos 2025 conference, U.S. Federal Reserve Governor Christopher Waller underscored the central bank’s growing focus on emerging technologies poised to transform the financial system. In his remarks, Waller highlighted the Fed’s hands-on research into tokenization, smart contracts, and artificial intelligence (AI) within the payments sector, aiming to understand how private innovators leverage these tools and identify potential infrastructure upgrades.
**Stablecoins as a New Era of Payment Innovation**
Waller positioned stablecoins as a critical component of the evolving payment landscape, framing them as a natural extension of America’s tradition of financial innovation. He argued that stablecoins—digital assets pegged to traditional currencies—should be recognized as a legitimate payment option, akin to banks, card networks, and fintech platforms.
“These digital assets represent a new form of private money that can coexist with existing instruments if supported by robust safeguards,” Waller stated. He emphasized that stablecoins align with the U.S. ethos of consumer choice, enabling individuals and businesses to select providers based on their needs. For example, a consumer might opt for a high-yield savings account from one provider while using another for cross-border payments or QR code transactions.
**Competition Drives Efficiency**
Waller noted that stablecoins could intensify competition in the payments sector, pushing traditional players to lower costs and improve service quality. He pointed to the inefficiencies in remittance corridors—often plagued by complex infrastructure and intermediaries—as an area where stablecoins could offer significant efficiency gains. By streamlining transactions, stablecoins could reduce fees for end-users and challenge incumbents to innovate, particularly in cross-border payments.
“Introducing stablecoins into this mix encourages competition on cost, speed, efficiency, and user experience,” Waller said, highlighting the potential for blockchain-based solutions to reshape the industry.
**Balancing Innovation with Risk Management**
While advocating for technological progress, Waller stressed the importance of regulatory oversight to mitigate risks. He warned that without safeguards, new systems could expose consumers to cybersecurity threats and systemic vulnerabilities due to fragmented standards.
“Achieving security and resilience means ensuring these digital platforms are hardened against misuse, with redundancy and safeguards in place that match the scale of domestic and global payments,” he emphasized. Waller called for coordinated risk management frameworks to build public trust and maintain financial stability.
**A Vision for the Future**
Waller’s remarks reflect the Fed’s dual mandate of fostering innovation while prioritizing stability. By engaging with private-sector technologies and advocating for a regulatory approach that balances opportunity with protection, the central bank aims to ensure that the financial system remains resilient, efficient, and inclusive. As stablecoins and other digital assets gain traction, Waller’s vision underscores the need for collaboration among regulators, industry players, and technologists to shape a future where competition and security coexist.
In an era of rapid technological change, the Fed’s proactive stance signals a commitment to adapting to the evolving financial landscape while safeguarding the interests of consumers and the broader economy.