US Federal Reserve Governor Michelle Bowman believes that banks and regulators must adapt to the benefits of new technologies like artificial intelligence and cryptocurrency to remain relevant in the economy. Speaking at the Wyoming Blockchain Symposium, Bowman emphasized that "change is coming" and regulators should allow new uses to "proliferate in a way that benefits the banking system." If they fail to do so, the banking system risks becoming less relevant to consumers, businesses, and the overall economy.
Bowman urged banks and regulators to actively embrace technologies like AI, blockchain, and cryptocurrency. She emphasized the need for a regulatory model that balances risk management with space for innovation, highlighting the importance of regulatory certainty, proportionality, consumer protection, and maintaining US leadership in financial innovation.
To better understand the technology, Bowman suggested allowing Fed staff to hold small amounts of cryptocurrency, which would provide them with practical experience. The Fed is working towards a more adaptive oversight model, acknowledging the potential of blockchain and AI to transform financial services.
Bowman's comments signal a potential shift in the Fed's approach to AI and crypto regulation, prioritizing innovation while ensuring financial stability. As the financial landscape continues to evolve, it will be crucial for regulators to strike a balance between fostering innovation and managing risks.
