Chung: Evolving Market Structure and the Desk’s Role

Introduction

Thank you. It's wonderful to be here today. I've had the opportunity to be in the audience at this conference since it began in 2022, and it has been fascinating to watch the discussions evolve over that time. This is, in part, a testament to the efforts and expertise of the organizing committee. I'd like to thank my colleagues at the Federal Reserve Board of Governors and the Federal Reserve Bank of New York-Ricardo, Ritt, Juan, Linda, and Fabiola-for their diligent work putting this important event together.¹

It is particularly exciting to be speaking at this conference now, as I've stepped into my role leading the Domestic and International Markets function on the Open Market Trading Desk (the Desk) at the New York Fed. The Desk implements monetary policy on behalf of the Federal Open Market Committee (FOMC) and supports the international roles of the dollar through domestic and foreign operations. Its work sits at the intersection of monetary policy and financial markets, in a small but key part of the ecosystem that we refer to as "implementation."

Monetary policy implementation takes place in markets that are rapidly evolving, as evidenced by the rich discussions in today's sessions. As we observe how monetary policy transmits through financial markets, it is clear that the infrastructure facilitating this transmission is important to the policy process and merits consideration. Who intermediates financial transactions, how trade execution takes place, where market liquidity is concentrated, how and when trade settlement occurs-these structural features can determine how policy is effectively implemented. In turn, the effects of innovation must be taken into account as the Federal Reserve implements monetary policy, supports the use of the U.S. dollar internationally, and promotes financial stability.

In my remarks today, I will reflect on how financial market structure is transforming and highlight why this matters for the critical role that the dollar plays in the global economy. Then, I'll conclude by explaining how we seek understanding, engage in technical experiments, and convene forums such as this one to prepare for changes to the infrastructure that could impact the dollar's international roles.

Before that, I want to note that the views I express today are my own and do not reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.

The Infrastructure Is Transforming

Today, technological advancement is driving market innovation at an unprecedented pace. As Eswar Prasad described in his keynote, these innovations could fundamentally change how financial markets operate and affect the dollar's important roles.

We are already seeing examples of rapid structural changes. Digital ledger technology is advancing, allowing financial assets-both money and securities-to be converted into digital tokens such as stablecoins, which are now being used in markets and not just tested in experiments. 24/7 trading and atomic settlement capabilities are increasing trading efficiencies. More and more, AI-driven algorithms are prevalent and provide new trade execution methods. Earlier this morning, we explored emerging payment rails and blockchain-based markets, and in the sessions this afternoon, we heard about links between various types of digital currencies and traditional financial markets. Many of these innovations prompt both excitement and caution, as markets explore the associated opportunities and risks.

Why This Matters for the Dollar's International Roles

As has been discussed for several years at this conference, the dollar plays a central role in trade invoicing, cross-border payments, official reserve holdings, and funding global financial transactions. Its important international roles rest on fundamental pillars such as the size and strength of the U.S. economy, U.S. price stability, deep and well-functioning financial markets, and a reliable payment infrastructure.²

The Federal Reserve supports the dollar's role through several channels. In the Fed's monetary policy implementation framework, an ample supply of U.S. dollar reserves delivers adequate liquidity to the banking system, helping to maintain rate control and smooth market functioning.³ International facilities including the central bank swap lines and the Foreign and International Monetary Authorities (FIMA) Repo Facility help ensure well-functioning U.S. dollar funding markets domestically and abroad.⁴ Through the implementation of monetary policy, and acting as a global dollar liquidity provider of last resort, the Fed supports the pillars on which the dollar's roles rest.

The technological evolution that we are observing today can affect this foundation. Importantly, as we implement monetary policy, these innovations require us to ask deliberate questions to help us anticipate what's ahead. For example: How do changes in payment technology and digital asset adoption alter the dollar's international reach? How do shortened or atomic settlement cycles impact trading and the demand for safe assets? How do these changes affect price discovery dynamics, and what do new efficiencies mean for dollar liquidity provision? Are markets heading toward greater fragmentation as competitive pressures drive innovation? What are cross-market connections in this evolving world, and how might technological change amplify synergies or spillovers?

This conference reflects our commitment to anticipating and understanding changes brought about by technological advancements. At the time of the inaugural conference in 2022, digital assets were primarily used for retail speculation with a limited cross-border scope. A mere four years later, participants today discussed a wider range of use cases and showed that institutional adoption is accelerating. The pace of change underscores why anticipation matters, which brings me to my last point.

How the Desk Is Preparing

To support the pillars of the dollar's international roles in a dynamic environment, the Desk takes action in three important ways.

First, we monitor. Our daily interactions with market participants help us stay on top of market developments and provide us with intelligence on how structural changes might affect monetary policy transmission and the dollar's international roles. To inform policy making, we speak to a wide range of participants, including banks, nonbanks, financial market platforms and utilities, new market entrants, and experts from across academic, industry, and policymaking bodies.

Second, we experiment. Through the New York Innovation Center in the Markets Group at the New York Fed, and in collaboration with the Bank for International Settlements (BIS), we conduct hands-on research projects around technological innovation. For example, the Innovation Center's Project Cedar examined tokenization's market structure impacts, and Project Pine developed smart contract tools for monetary policy implementation in tokenized environments.⁵ We are also participating in Project Agora, which is a public-private collaboration, led by the BIS and Institute for International Finance, that explores ways tokenization may be used to enhance wholesale cross-border payments.

And lastly, we convene. In different forums at the New York Fed, we engage with a range of experts to understand market evolution. We sponsor the Foreign Exchange Committee and Treasury Market Practices Group to discuss evolving market structure and best practices. We host advisory groups such as the Financial Advisory Roundtable and Innovation Advisory Council, which discuss financial stability issues and digital innovation. Hosting forums like this week's Innovation Conference at the New York Fed, as well as the annual U.S. Treasury Market Conference and FX Market Structure Conference, create space to engage market participants, technologists, and researchers. Convening is about actively and cooperatively building the understanding needed to inform the implementation of monetary policy as market structure evolves.

Conclusion

In sum, the dollar's international roles rest on foundations that include our commitment to price stability, the liquidity and depth of U.S. markets, and the effectiveness of monetary policy implementation. Understanding the connections between market innovations and the dollar's central role should not be taken for granted as we navigate a world of emergent complexities.

We will continue to ask a range of critical questions, make broad connections between markets, and provide market intelligence to policymakers to help navigate rapid technological change-not just reacting to the moment but also anticipating the future.

But we don't do this work in isolation. Our engagement with market participants, academics, and fellow central bankers enriches our perspective and strengthens our ability to navigate structural change. The academic research, panel discussions, and practitioner insights at conferences like this one are essential to understanding how innovation affects monetary policy implementation and the international roles of the dollar. I look forward to continuing this dialogue and to learning from all of you.

¹ I would like to thank Will Burchell and Pertshuhi Torosyan for their assistance in preparing these remarks and others across the Federal Reserve System for their many helpful suggestions.

² See Bertaut, Carol, Bastian von Beschwitz, and Stephanie Curcuru (2025). "The International Role of the U.S. Dollar - 2025 Edition," FEDS Notes. Washington: Board of Governors of the Federal Reserve System, July 18, 2025, and Ricardo Correa, Linda S. Goldber, Juan Londono, and Fabiola Ravazzolo, International Currency Dominance: Market Structure, Asset Safety, and Liquidity, The Teller Window, February 19. 2026.

³ Roberto Perli, Reserve Management and the Fed's System Open Market Account: Recent Experience and Insights from Surveys, remarks at the Federal Reserve Bank of Atlanta 2026 Financial Markets Conference, Fernandina Beach, Florida, May 19, 2026.

⁴ See Choi et al., The Fed's Central Bank Swap Lines and FIMA Repo Facility, FRBNY Economic Policy Review, June 22; and Christopher J. Waller, Welcoming Remarks on the International Role of the U.S. Dollar, remarks before the Third Conference on the International Roles of the U.S. Dollar, Washington, D.C., May 20, 2024.

⁵ See New York Innovation Center for information about the Center and affiliated research, analysis, and technical experimentation