Fed Governor Casts Tokenization as New Dollar Channel

Federal Reserve Board of Governors member Christopher J. Waller opened the Federal Reserve’s Fifth Conference on the International Roles of the Dollar on Monday (June 22) with remarks detailing the purpose of the meeting: to bring together different perspectives on the forces shaping the dollar’s global role.

“This year, we are here to discuss the implications of financial innovations, especially digital assets such as stablecoins, for the international roles of the U.S. dollar,” he said.

Waller noted that the dollar’s central position in the global financial system still rests on familiar foundations: the size and strength of the U.S. economy, deep financial markets, and trust in U.S. institutions and the rule of law.

At the same time, he said the environment around those drivers is changing quickly as distributed ledger technology and tokenized assets create new channels for dollar intermediation that operate alongside, and sometimes together with, traditional banking and payment systems.

“As a result, the dollar’s international role is also evolving,” Waller said. “The private sector is moving rapidly to expand access to dollar-denominated assets, innovate in new financial services, and explore potential business opportunities that perhaps did not make sense with legacy technologies.”

The remarks framed the conference as part of a broader debate over how innovation may reinforce the dollar’s reach even as it alters the way dollars move across borders and through financial markets.

Waller’s remarks regarding the financial system’s tumultuous relationship with technology have been echoed by other Federal Reserve leaders. Federal Reserve Vice Chair for Supervision Michelle Bowman told lawmakers earlier this month: “The financial system continues to adapt to technological advances, including the rapid evolution of artificial intelligence capabilities and the risks and benefits of its use.”

She warned, however, that AI technologies have amplified digital vulnerabilities across critical financial infrastructure, including banking systems.