Federal Reserve Vice -chairman for Michelle Bowman supervision has called to embrace banks to embrace blockchain technology or to lose the risk of relevance.
AT The Wyoming Blockchain symposium on 19 August emphasized Bowman that supervisors and banks should use a more proactive approach to the crypto industry.
She pointed out that integrating these new innovative technologies would be crucial to maintain relevance in a rapidly evolving financial landscape.
She said:
“It is essential that banks and supervisors are open to new technologies and depart from a too careful mindset. Regulators must understand new products and services and recognize the usefulness and need to embrace technology in the traditional financial sector.”
The Fed Executive argued that this shift is not optional but necessary for the continuous vitality of the banking system. She added that institutions that do not evolve can become peripheral players, while future -oriented banks could strengthen their position in the market.
Tokenization as an immediate use case
Bowman emphasized tokenization as one of the most direct applications of blockchain. She explained that tokenized assets can be transmitted digitally without intermediaries or the physical movement of effects.
She said that the approach eliminates many manual steps and storage coordination that currently creates delays and increases the operational risk.
In addition, Bowman noted that tokenized systems can streamline these steps, reduce operational friction and expand access to the market.
As a result, the FED chef noted that the regulations could move adaptation of pilot projects to regular acceptance that would benefit both large banks and smaller community institutions.
Fraud prevention
In addition to the efficiency of tokenization, Bowman emphasized the potential of blockchain to combat fraud.
In the speech, she admitted that financial institutions run risks due to identity theft, scams and related crimes.
However, it argued that if blockchain fraud can reduce, regulators must facilitate its approval instead of obstructing it.
According to her:
“If fraud can be tackled with the help of new technology, we must ensure that the regulatory framework does not stand in the way. I see this as an exciting opportunity for cooperation between industry and the FED.”
