The evolution of how we use money is now.
Innovations such as 24/7 instant payments, digital wallets, and stablecoins are no longer futuristic concepts but rapidly becoming mainstream.
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Federal Reserve Governor Christopher J. Waller championed what he called a “technology-driven revolution” in the payments arena during a speech at the Wyoming Blockchain Symposium Aug. 20.
Image source: Garcia/Bloomberg via Getty Images
Waller highlights how money moves today
Waller, who is considered a candidate to replace Fed Chair Jerome Powell, explained the evolution in familiar terms.
Every transaction involves three steps: exchange, execution technology, and record-keeping.
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Modern systems mimic traditional mechanisms, he said, pointing to stablecoins and smart contracts as digital parallels to debit card swipes and receipts.
Waller emphasized the private sector as the primary driver of payments innovation.
While the Fed should support and sometimes enable infrastructure, such as clearing and settlement platforms, it should step in directly only where market gaps exist, he said.
“In fact, I believe that stablecoins have the potential to maintain and extend the role of the dollar internationally,” Waller said. “Stablecoins also have the potential to improve retail and cross-border payments.”
Fed acts to strengthen digital efficiencies
The governor also said that the Fed is actively researching tokenization, AI, and smart contracts to better understand their potential to strengthen efficiencies, widen accessibility, and maintain security.
He underscored that technologies like AI – most notably generative and agentic models – are already enhancing fraud detection and reconciliation processes in payment systems.
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“In addition to stablecoins, the use of AI in payments is an area where we are seeing significant private sector-led innovation,” Waller said. “Here, AI is not serving as payments infrastructure but as an enabling technology that could bring considerable benefits to both private and public sector-operated payment services.”
These complementary roles have led to a U.S. payment system that operates safely and efficiently and serves as a backbone for commerce in the U.S. and globally, he said, adding that “is why it is important for the Federal Reserve to continue to embrace technological advancements to modernize its services and continue to support private sector innovation.”
Fed conducts technical research on payment innovations
The Fed is also conducting technical research on the latest wave of innovations, including tokenization, smart contracts, and AI in payments, he said.
“As a payment system operator, it is important to understand trends in payments technology so that we can continue to support private sector firms that leverage our infrastructures, as well as understand whether emerging technologies could provide opportunities to improve our existing platforms and services,’’ Waller said.
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“In fact, it is my belief that the Federal Reserve could benefit from further engagement with innovators in industry, particularly as there is increased convergence between the traditional financial sector and the digital asset ecosystem,” Waller said in conclusion.
In the July 2025 Federal Open Market Committee meeting, Waller, alongside Fed Vice Chair Michelle Bowman, dissented from the committee’s decision to hold interest rates steady, arguing that economic conditions warranted a cut.
They cited a weakening jobs market and slowing consumer momentum as compelling reasons for easing policy.
It was the first time in nearly 30 years that the FOMC had a dissenting opinion.
The next FOMC meeting is Sept. 17.
The Fed’s annual Jackson Hole Economic Policy Symposium occurs Aug. 21-23.
Related: Fed’s Jackson Hole conference could mean fireworks this week
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