The Federal Reserve of the United States has announced that it plans to launch its immediate payments service, known as FedNow, by the summer of the following year.
FedNow Is Scheduled to Begin Operations in the Following Year
The United States Federal Reserve is getting set to introduce FedNow, a brand-new payment facilitation technology that may reduce or eliminate the requirement for a centralized bank digital currency.
Today, the Vice Chair of the Federal Reserve, Lael Brainard, made the announcement that the FedNow Service is anticipated to go online between the months of May and July 2023. In addition, Brainard mentioned that the system would be put through a series of technical tests commencing in September of this year.
The announcement was made on the 29th of August via livestream during an Early Adopter Workshop that was held in Rosemont, Illinois.
During the session that took place today, Brainard requested that all of the financial institutions and software suppliers in the United States bring their systems up to date in preparation for the introduction of the new service.
According to Brainard, “the transition to real-time payment infrastructure demands a concentrated effort, but the transition itself is unavoidable.” “The moment has come for all of the important stakeholders…to commit the resources necessary to facilitate rapid payments,” says one source.
It is anticipated that participation will expand as a result of activities such as a pilot program, a resource known as FedNow Explorer, the FedNow Community, and the FedNow Early Adopter Workshop.
In the United States, families, businesses, and financial institutions can engage in transactions in real time using a system called FedNow, which the Federal Reserve describes as an instant payment system.
Brainard pointed out that the service is developed using cloud technology, which makes it possible for the payment system to scale without jeopardizing its robustness. This capacity to scale applies to the system’s throughput as well as its geographic coverage, which ensures that service is maintained even in areas that are geographically isolated.
Within the cryptocurrency sector, FedNow is notable due to the fact that it has been promoted as a potential alternative to a digital currency issued by a central bank (CBDC). FedNow, in particular, “addresses the difficulties that some have raised about the need for a CDBC,” as Federal Reserve Governor Michelle Bowman noted on August 17 regarding the program.
In the meanwhile, Brainard has stated that the establishment of a CBDC would call for the permission of Congress and would take at least five years to plan out and put into action. As a consequence of this, FedNow will very definitely be completed before any CBDC initiatives in the United States are brought to a successful conclusion.