The president and CEO of the Federal Reserve Bank of San Francisco gave a speech on financial technology earlier this week, pointing to digital currencies as an area of potential risk.
In remarks, John Williams of the San Francisco Fed noted the proximity of his institution to Silicon Valley, and indicated a desire to engage with developers of FinTech – but suggested that some areas of development are perceived as risky by central bank officials.
He pointed to advanced computing applications as having the potential to “help overcome” money laundering and terrorist financing issues, before going on to say that financial compliance can prove to be a cost burden for some institutions.
“The other side of that coin, of course, is that, left unbridled, the ease and anonymity of some types of FinTech, such as digital currencies, have the potential to make criminal and terrorist activity even easier.”
His speech made no further mention of digital currencies, and Williams closed by suggesting that central bank officials see a need for regulation to prevent “unintended consequences” of the growth of financial technology.
“In that regard, well-designed regulation that protects consumers, fosters inclusionary rather than exclusionary practices, and enhances the fairness and resilience of the financial system should help rather than hinder FinTech’s contribution to creating a better financial system and economy,” Williams concluded.
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