According to the U.S. Federal Reserve, FedNow will be made available by the end of the summer.
FedNow is scheduled to debut in 2019
A new payment facilitation system called FedNow, which the Federal Reserve is getting ready to roll out, would lessen the need for a central bank digital currency.
The FedNow Service is scheduled to launch between May and July 2023, according to Lael Brainard, vice chair of the Federal Reserve, who made the announcement today. Brainard added that technical testing of the system would start in September.
On August 29, the information was broadcast online at an Early Adopter Workshop in Rosemont, Illinois.
At the session today, Brainard urged American financial institutions and software companies to upgrade their systems in advance of the debut of the new service.
“The shift to real-time payment infrastructure requires a focused effort, but the shift is inevitable” Brainard said. “The time is now for all key stakeholders…to devote the resources necessary to support instant payments.”
Engagement is anticipated to expand as a result of initiatives like a pilot program, the FedNow Explorer resource, the FedNow Community, and the FedNow Early Adopter Workshop.
The FedNow fast payment system enables real-time transactions between American families, companies, and financial institutions, according to the Federal Reserve.
According to Brainard, the service was developed using cloud technology, which enables the payment system to scale without compromising resilience. Since the system can scale both in terms of throughput and geographic coverage, it can provide ongoing service even in remote areas.
Because it has been promoted as a substitute for a digital currency issued by a central bank, FedNow is notable within the cryptocurrency sector (CBDC). Michelle Bowman, governor of the Federal Reserve, noted in particular that Fed Now “addresses the difficulties that some have raised about the necessity for a CDBC” on August 17.
A CBDC would require congressional approval and take at least five years to create and implement, according to Brainard. FedNow will therefore virtually definitely take place before any CBDC efforts in the United States are finished.
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