Powell of the Fed says the new innovation center will help central banks improve payments By Reuters

(Reuters) – The New York Federal Reserve launched a new innovation center on Monday to help the central bank explore the possibility of a digital currency that assesses the financial risks associated with climate change and addresses other issues such as financial markets infrastructure and regulation.

The center, in collaboration with the International Settlement Bank (BIS) Innovation Hub, will help the central bank improve its current payment system, Fed Chairman Jerome Powell said in a statement prepared for a virtual event on Monday.

“In particular, the partnership will support the analysis of digital currencies, including central bank digital currencies,” Powell said, adding that the center will focus on making cross-border payments faster and cheaper and provide new tools to help financial companies oversee.

Powell did not comment on economic or monetary policy forecasts in his statements.

The Fed is considering whether to launch a digital version of the U.S. dollar, and the Fed is working on a discussion paper that will address policy issues with the central bank’s digital currency.

New York Fed researchers have also developed an approach to measuring banks ’exposure to climate-related risks, assessing whether financial institutions may have sufficient capital to deal with them.