Digital currencies are only one disruptor in the already intricate U.S. banking ecosystem.

Countering the belief that digital currencies could prove the “end of banking,” the rise in cryptocurrency and central bank digital currencies (CBDC) will add an additional layer of complexity to the U.S. banking system, John C. Williams, president of the Federal Reserve Bank of New York, said Tuesday during a panel discussion at the Bank for International Settlements (BIS) Innovation Summit 2022 virtual conference.

“The answer coming out of this is not that it disrupts and totally transforms or destroys existing institutional structures,” Williams said. “It just creates a more complicated model. The U.S. economy is already a hybrid model with banking and capital markets. This just adds to that mix.”

When asked about bank use cases for digital currencies, Williams mentioned stablecoin-based cross-border payments and wholesale transactions, but was quick to point out the regulatory concerns involved.

“When I think of stablecoins, I think that there’s potential here with the technology,” he said. “We have to make sure we are not replicating the risks and dangers, either around protection for consumers or investors, but also in terms of financial stability.”

Williams added caution to his statements on cryptocurrencies at large, stating that transaction and environmental costs as well as fluctuating values are “fundamental flaws.”

Innovations in core banking technology are a bright spot in the U.S. banking industry, he said, adding that “disruptive technology has huge advantages over legacy systems.”

“Financial service firms have invested massively in legacy systems, which are expensive and based on older technologies. Keeping up with that can be hard to do, especially for complex organizations,” Williams said.