Monday, 20 March 2023

Crypto News

Federal Reserve confirms July launch for FedNow instant payment service

Federal Reserve confirms July launch for FedNow instant payment service

The United States Federal Reserve has confirmed a July launch date for its long-awaited instant payments system, seen by some as an alternative to central bank digital currencies (CBDCs) and stablecoins.

The instant payment network will settle payments in seconds and can support transactions between consumers, merchants and banks. It does not rely on blockchain technology.

It’s a significant step for the government as it is controlled by the Federal Reserve Bank, as opposed to Clearing House’s RTP network which is operated by a consortium of large banks. 

According to a March 15 announcement, the U.S. Fed said the debut of FedNow is set for July with the U.S. Treasury and a “diverse mix of financial institutions of all sizes” ready to use the network from launch.

The Fed said it will “begin the formal certification of participants” during the first week of April in preparation for the launch.

“Early adopters will complete a customer testing and certification program, informed by feedback from the FedNow Pilot Program, to prepare for sending live transactions through the system,” the announcement reads.

FedNow was announced in 2019 and will provide round-the-clock, real-time gross settlement by funneling commercial bank money from a sender through a Fed credit account to its recipient. It also has built in features such as fraud risk management.

Following the official launch, the Federal Reserve outlined that it will push to onboard as many as financial institutions as possible in order to increase the availability of instant payments.

“The launch reflects an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of our economy,” noted Tom Barkin, president of the Federal Reserve Bank of Richmond and FedNow Program executive sponsor, as part of the announcement.

Some see the FedNow service as tackling a problem that both stablecoins and CBDCs seek to solve too.

The FedNow program however doesn’t use blockchain tech, while the Federal Reserve is known to have a cautious and skeptical view on stablecoins. 

Tweet from Meltem Demirors on FedNow. Source: Twitter


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