Quantum calculations, the Federal Reserve and the future

Ever since I was a little boy disassembling transistor radios to see the magic inside, I’ve been fascinated by the way things work. Or as my family and friends sometimes say more frankly, I’ve always been a tech maniac. Now, as president of the Reserve Bank and chairman of the Federal Reserve’s technology-focused committee, I am showing interest in the subject every day.

Fortunately for me and my fellow technicians, our age of remarkable innovation. From the development of personal computers, smartphones and the Internet to the rise of gene therapies, stem cell therapies and zero-carbon electricity, technological developments have played a role in making the world healthier, greener, more comfortable and – as we all know – sometimes distracting.

We are now facing the abyss of another major technological leap: the development and implementation of quantum computing, a potentially revolutionary technology. This is an exciting time, full of opportunities, but also full of risks. The Federal Reserve, as a national central bank and regulator, has a strong interest in promoting an environment that is conducive to innovation and that protects our country’s financial infrastructure.

So what are quantum calculations? To begin to answer this question, it is useful to think a little about quantum mechanics.

Quantum mechanics is a branch of theoretical physics that essentially studies very, very small things – especially the behavior of matter and light on a subatomic scale. These smallest discrete units are called quantum particles.

Once you get to such a small scale, things behave strangely. They do not act at all like the objects we see in our daily lives.

Quantum particles can, for example, be in a state of superpositionwhich is not easy to grasp. During superposition, quantum particles are simultaneously in combination with all their possible states. Imagine a quarter showing heads, tails, and any condition in between at the same time, which would definitely make it harder to toss a coin from the NFL.

And then there is quantum entanglement. What is? I like this description from Cal Tech: “When two particles, like a pair of photons or electrons, intertwine, they stay connected, even when separated by huge distances. In the same way that ballet or tango is performed by individual dancers, entanglement arises from the connection between the particles. ”

No wonder Albert Einstein once described quantum entanglement as a “ghostly action from a distance.” Or, if you prefer a more scientific term than “ghostly,” you can also say “weird.”

What’s so exciting is that quantum computing does what used to be theoretical, real.

Here’s how: Quantum computing is based on insights discovered in quantum mechanics to significantly expand computing power. Instead of just zeros and ones, quantum computers use quantum principles such as superposition and entanglement. Instead of “bits” – zeros and ones – quantum computers use what is called to quit. That is, they calculate using zeros, ones, and everything in between. This makes them extremely powerful when it comes to performing tasks such as machine learning, search and cryptography. These are the real supercomputers of the fast approaching future.

Here, I think, the opportunities and risks for governments, businesses, institutions and even individuals are clear. Whether you call it ghostly, strange or just exciting, there is no doubt that quantum computing has the potential to revolutionize our world.

Imagine, for example, quantum computers simulating the structure, properties and behavior of molecular structures, the building blocks of pharmaceutical products. The benefits of drug development can be profound.

Or imagine financial institutions using quantum calculations to more accurately calculate risk, which allows them to promote inclusion while strengthening their balance sheets and reducing threats to the financial system.

Closer to home, the introduction of quantum economic model management technologies can significantly strengthen our understanding of the economy and the way it responds to changes in the Fed’s monetary policy.

Overall, it’s no wonder that some of the biggest names in technology, banking and pharmaceuticals are making big investments in quantum technology.

The reason for greater concern is the prospect of quantum technology falling into the wrong hands. One thing is for sure: current encryption methods will not withstand quantum cryptography. Governments, corporations and institutions are already working hard to develop quantum secure encryption, and that is a good thing. The cyber environment is already full of threats from malicious government officials to online thugs, and quantum technology will only exacerbate them. For our part, ensuring that the financial system and the Federal Reserve are secure is at the top of our list of priorities.

You can learn more about quantum computing in this video and take a closer look at some of the challenges posed by quantum computing in this paper from the Global Risk Institute.

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