Federal Reserve Governor Sees AI and Stablecoins as Keys to Payment Revolution

Federal Reserve Governor Christopher Waller has reaffirmed his support for the integration of artificial intelligence (AI) and stablecoins into the financial ecosystem, emphasizing their potential to enhance the efficiency and modernization of payment systems in the United States. In a recent speech, Waller highlighted the ongoing “technology-driven revolution” in payments, driven by advancements in computing power, data processing, and distributed networks. He noted the emergence of 24/7 instant payments, digital wallets, and stablecoins as key innovations that are reshaping the landscape [1].

Waller emphasized that AI has been a cornerstone of payments innovation for decades, particularly in fraud detection and transaction forecasting. Since the early 1990s, payment firms have leveraged machine learning techniques to identify suspicious activity and streamline operations. More recently, generative AI has enabled further improvements in compliance systems and payment reconciliation. Waller pointed out that agentic AI, which operates autonomously to execute complex tasks, is the next frontier and is already being explored by private-sector innovators [1].

Stablecoins, another focal point of Waller’s remarks, are seen as a promising development in both retail and cross-border payments. He described them as a private-sector-led innovation that originated in the crypto trading space and has since expanded into broader financial applications. According to Waller, stablecoins can offer 24/7 availability, fast transferability, and accessibility in regions with limited banking infrastructure. He also noted their potential to reinforce the international role of the U.S. dollar, particularly in economies experiencing high inflation or limited access to traditional dollar banking services [1].

The regulatory environment for stablecoins has been a point of discussion among policymakers, and Waller acknowledged the importance of a clear regulatory framework to support their growth. In this regard, the recent enactment of the GENIUS Act marks a significant legislative step toward achieving regulatory clarity in the stablecoin market. Waller emphasized that stablecoins, like traditional card payments, operate within a broader financial ecosystem and often rely on legacy payment systems for funding and redemption [1].

Beyond stablecoins, Waller highlighted the evolving role of the Federal Reserve in fostering innovation while maintaining the safety and efficiency of the payment system. He outlined two primary models for payments innovation: one led by the private sector and the other involving public-sector infrastructure. In the first model, the private sector takes the lead in developing new services using proprietary technology, as seen with the evolution of payment cards from physical cards to contactless digital transactions. In the second model, the Federal Reserve provides the foundational infrastructure that enables private firms to deliver services to consumers [1].

Waller also discussed the importance of the FedNow system, launched in 2023 to facilitate real-time payments. This platform addresses a gap in the U.S. payments landscape and aligns with global trends in instant payment adoption. He noted that the Federal Reserve is actively researching emerging technologies, including tokenization and smart contracts, to determine how they might improve existing platforms and services. Waller encouraged continued collaboration between the Federal Reserve and private-sector innovators, especially as traditional financial systems converge with digital asset ecosystems [2].

The Federal Reserve’s approach to payments innovation reflects a broader commitment to leveraging technology for economic growth. Waller’s speech underscored the complementary roles of the public and private sectors in driving a modern, secure, and efficient payments system. As the U.S. payment landscape continues to evolve, the central bank’s engagement with cutting-edge technologies is expected to play a crucial role in supporting private-sector advancements while maintaining regulatory oversight and systemic stability [1].

Source:

[1] Speech by Governor Waller on payments (https://www.federalreserve.gov/newsevents/speech/waller20250820a.htm)

[2] Waller Says Fed Should Work With Industry on Payment Services (https://www.bloomberg.com/news/articles/2025-08-20/waller-says-fed-should-work-with-industry-on-payment-services)