Fed Governor Details "System-First" Strategy on AI Adoption

Federal Reserve Board Governor Christopher J. Waller outlined a "system-first" approach to artificial intelligence to improve operational efficiency and workforce productivity while maintaining strict risk controls. 

In remarks at a Conference on how technology is shaping the future of finance and payments at the Federal Reserve Bank of Boston, Mr. Waller highlighted three ways the Fed is currently deploying AI to drive business value, including: (i) providing general-purpose AI assistants to all employees to summarize and synthesize routine information; (ii) equipping developers with specialized coding assistants to optimize software development and reduce technical debt; and (iii) embedding AI capabilities directly into existing enterprise workflows, such as legal, risk, and operations. He stressed that AI adoption at the Fed "is not optional," noting that "baseline literacy and application are [now] built [directly] into employee performance goals" to ensure the technology becomes a "durable part of how the Federal Reserve operates."

Mr. Waller compared the rise of AI to the introduction of ATMs, explaining that the technology will ultimately shift human effort toward higher-value activities rather than simply automating existing processes. He cautioned that waiting for perfect clarity on AI's systemic impact is not a viable strategy and that the work to rethink workflows and systems must start now. He said that the Fed is moving away from its historical bank-by-bank technology model. To avoid duplication and operational risk, the Fed is adopting shared infrastructure for frontier technologies like AI, tokenization, and quantum computing. He emphasized that as a central bank, the Fed cannot operate with a "break things and ask forgiveness" mentality; instead, it must balance innovation with strict risk management, including strong security controls, "rigorous model validation," and human accountability.