Financial Innovation Brings Promise and Peril, Warns Top Economist

Catherine Mann, chief international economist at Citicorp and an external member of the Bank of England's Monetary Policy Committee, spoke about the implications of financial innovation on payments and policy at the Federal Reserve Bank of Kansas City's annual Jackson Hole symposium.

Mann emphasized that the impact of new innovations, such as stablecoins and tokenized deposits, is not just about creating a new payment system but also affects what constitutes money. She highlighted the importance of trust and integrity in central banks and governments as the ultimate backers of money.

The speed at which technological changes and financial innovations are occurring was another key point Mann made. She noted that there's a divergence in adoption rates among different actors, including financial institutions, firms, individuals, and policymakers.

Mann expressed concern about the current climate for international regulatory cooperation, given the global nature of capital flows. She pointed out that the U.S. and Europe have differing views on stablecoins versus tokenized deposits.