Dive Brief:

• The Federal Reserve Bank of New York and the Bank of International Settlements (BIS) last week inaugurated the New York Innovation Center (NYIC), which will conduct research on financial technology to help regulators keep a finger on the pulse of the rapidly evolving sector.
• The center will focus on five areas: supervisory and regulatory technology, financial market infrastructures, future of money, open finance and climate risk.
• The partnership between the New York Fed and the BIS innovation hub will “support our analysis of digital currencies, including central bank digital currencies,” Federal Reserve Chair Jerome Powell said last week at the virtual launch event. The center is meant to “help to improve our current payment system, with a particular focus on making cross-border payments faster and less expensive, and it will provide new tools to aid our supervision of the financial system.”

Dive Insight:

BIS — based in Basel, Switzerland — is owned by 63 central banks, representing countries comprising about 95% of world gross domestic product.

The BIS Innovation Hub first announced its intention to form a strategic partnership with the Federal Reserve Bank of New York in June 2020.

“The strategic partnership will let the BIS Innovation Hub benefit from the Federal Reserve’s expertise in innovation, and allow us to contribute our own global perspective to the work of the New York Innovation Center,” said Agustín Carstens, BIS's general manager. “We look forward to collaborating on projects and exchanges with the New York Innovation Center.”

The NYIC will be led by Per von Zelowitz, who joined the New York Fed in July. Previously, he served as senior entrepreneur in residence and founding member of Citi’s corporate incubator D10X and as financial services director of banking transformation at PricewaterhouseCoopers.

In May, Powell said the Fed would publish a "white paper" to jump-start a public conversation about the potential development of a U.S. central bank digital currency, but that report has yet to land. Since then, the Fed has made clear that it's looking to collaborate with other federal agencies on such discussions.

The center will be housed in the New York Federal Reserve Bank building.

“We are thrilled to announce the opening of the New York Innovation Center,” New York Fed President John Williams said. “The work of the Center will be powered by new and different ways of thinking and experimenting, while leveraging the expertise and connections of this strategic partnership. I look forward to working with our co-collaborators as we begin to make progress on our areas of focus and collective mission.”