- With FedNow, remittances that used to take hours or days are now almost real time, catching up with other countries.
- The Fed has denied any connection between FedNow and the digital US dollar initiative.
The Federal Reserve Board (FRB) has announced the official launch of its new real-time payment service, FedNow. It operates 24 hours a day, greatly shortening the time required for remittances.
35 banks and credit unions participating
According to the Fed, 35 banks and credit unions are participating. Early adopters include US banks JPMorgan Chase and Wells Fargo, with 16 other financial institutions supporting payment processing. The Fed says paychecks and bills will be available when needed.
In the past, payments through the U.S. banking system could take hours or even days, and FedNow is a dramatic change. Other countries have already moved to real-time payments.
“We built the FedNow service to make everyday payments faster and more convenient,” Fed Chairman Powell said in a statement.
FedNow offers the ability to facilitate the movement of funds that cryptocurrency and blockchain proponents have long championed. Given that US regulators are taking aggressive steps to crack down on digital currencies, the service could increase friction between the traditional financial system and crypto assets.
not a digital currency
FedNow has been criticized over whether it paves the way for a future digital US dollar. However, in a question-and-answer session on July 10, the Fed stated that “the FedNow service is not associated with digital currencies.” “FedNow is not a form of currency, nor is it a step toward the elimination of cash and other forms of payment,” he said. Meanwhile, officials such as Treasury Secretary Janet Yellen have argued that the US should consider a central bank digital currency (CBDC).
Officials, including Powell, have said in the past that a real-time payment network is necessary to avoid being forced to rely on private-sector alternatives like the now-abandoned Diem stablecoin, formerly known as Libra, led by CEO Mark Zuckerberg (formerly Facebook), a step some see as a step towards central bank digital currencies.
｜Editing: Rinan Hayashi
｜Original: Fed Dramatically Speeds Up US Payments With FedNow, but Downplays Any Tie to CBDCs