dynamic marketplace of innovative financial products and services. we have a responsibility to ensure that regulation and supervision foster innovations that improve access to financial services, while at the same time safeguarding consumers, financial institutions, and financial stability. thank you. 4 / 5 bis - central bankers'speeches 1 i am grateful to christine graham, laura lipscomb, and john maggs of the federal reserve board for their assistance in preparing this text. the views expressed here are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. 2 board of governors of the federal reserve system, federal deposit insurance corporation, and office of the comptroller of the currency, " joint statement on cryptoasset policy sprint initiative and next steps, " ( pdf ) joint press release, november 23, 2021. 3 board of governors of the federal reserve system, sr letter 22 - 6 / ca - 22 - 6 : engagement in crypto - asset - related activities by federal reserve - supervised banking organizations, august 16, 2022. 4 see the president's working group on financial markets, federal deposit insurance corporation, and office of the comptroller of the currency, report on stablecoins ( pdf ) ( washington : pwg, fdic, and occ, november 2021 ). 5 for example, see michael s. barr, no slack : the financial lives of low - income americans ( washington : brookings press, 2012 ). 6 board of governors of the federal reserve system, " federal reserve updates fednow service timing to mid - 2023, marks beginning of full - scale pilot testing, " news release, august 29, 2022. 5 / 5 bis - central bankers'speeches

michael s barr : managing the promise and risk of financial innovation speech by mr michael s barr, vice chair for supervision of the board of governors of the federal reserve system, at the dc fintech week, washington dc, 12 october 2022. * * * thank you, chris, and thank you for the invitation to speak to you today about the opportunities and risks of innovation. for the purposes of our discussion today, i will be focusing on financial innovation supported by new technologies, or fintech. 1 in the fall of 2017, we managed to get chris to accept an invitation to speak at a fintech conference in ann arbor, so it's about time that i returned the favor. since then, we have continued to see major changes in technologies and the financial services and products they support. in looking over the materials for that conference, however, i'm struck by how the key themes have remained constant over, not only the last five years, but arguably for centuries. financial innovation has always brought promise and risk, and the urgent need to get regulation right. in 1610, when dutch merchants and bankers were otherwise busy creating global finance, a series of destabilizing bank runs also moved them to establish a ban on short - selling. many of the issues we grapple with today are not as new as we think. supporting innovation with appropriate regulation first, let's start with the promise. every day, we all have countless interactions with the financial system - depositing our paychecks, buying groceries, paying rent, borrowing, saving, and insuring against important risks. the promise of fintech is that it can make financial products and services better, faster, cheaper, and more available. financial innovation supported by new technologies can disrupt traditional providers by spurring competition, creating products that better meet customer needs, and extending the reach of financial services and products to those typically underserved. to realize the benefits of innovation, we need to manage relevant risks. we have seen through history that excitement over innovative financial products can lead to a pace of adoption that overwhelms our ability to assess and manage underlying vulnerabilities. as we saw in the lead up to the global financial crisis, innovative financial products can mask emerging risks, resulting in significant harms to businesses and households and ultimately undermining financial stability. these products can leave consumers vulnerable if they are not coupled with meaningful disclosures and basic protections against abusive practices. innovation can lead to disruptions of existing