Federal Reserve Explores Smart Contracts and AI

The Federal Reserve is exploring the impact of smart contracts and AI on payments.

The United States Federal Reserve (Fed) is examining the impact of innovations on payment processes, including smart contract and artificial intelligence technologies. This was stated by board member Christopher Waller during the Wyoming Blockchain Symposium.

“Stablecoins are the latest example of payment innovations initiated by the private sector. Initially, ‘stable coins’ were used to facilitate cryptocurrency trading,” he noted.

Additionally, companies have found the technology appealing for other uses, such as ordinary savings in countries with high inflation. Stablecoins have “high potential” for the development of retail and cross-border payments, Waller added.

Besides stablecoins, the speaker highlighted AI. He believes that artificial intelligence serves not as a payment infrastructure but as a technology that can significantly benefit private and public services.

“Some may be surprised that in the financial sector, the payments industry has long been at the forefront of AI adoption. This pertains to several key stages of technological development. Since the early 1990s, payment companies have used machine learning for tasks such as fraud detection, money laundering prevention, and forecasting cash flows and trends,” explained the Fed board member.

Waller noted the growing popularity of autonomous AI agents, although he pointed out the early stage of development of such solutions.

“All this demonstrates that the evolution of the payment system has long been a story of technological progress. […] This is why it is important for the Fed to continue leveraging technological advancements to modernize its services and support innovations in the private sector,” the official emphasized.

According to Waller, the regulator is actively studying new technologies and engaging with “innovators” in these fields.

In August, the Fed announced the winding down of its oversight program for new types of banking activities, including cryptocurrency operations.