In a bid to make it possible for financial institutions under its purview to facilitate real-time, round-the-clock payments, the United States Federal Reserve, the nation’s central bank, has announced plans to launch its new payment and settlement service called FedNow, according to a press release on August 5, 2019.
Modernized Payments System
With the growing ubiquity and proliferation of distributed ledger technology (DLT) into the global financial ecosystem, more and more forward-thinking banks are leveraging the revolutionary technology for superfast and cost-efficient payments.
In order not to be left behind in innovation, the Federal Reserve, which is the United States central banking system has revealed that it is looking to develop FedNow, a solution that would enable lenders in the region to support round-the-clock, real-time payments.
The apex bank firmly believes that such a payment platform that supports the transfer of funds on a 24/7 basis, will be a great tool for individuals and businesses to seamlessly manage their funds and make time-sensitive payments.
Commenting on the exciting development, Federal Reserve Board Governor, Lael Brainard noted that it’s the right of every citizen to be able to send and receive payments in real-time in a secure manner and FedNow will make that possible.
In his words:
“Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community. FedNow will allow financial institutions of all sizes in all communities across the U.S. to offer real-time payments to their customers.”
The Feds to Adopt Blockchain Technology?
Reportedly, the Federal Reserve Board has been hatching plans to transform the U.S. payment industry since 2018, when it received over 90 percent positive feedback concerning its request for public comment on potential innovative services it could develop to foster faster payments.
With the decision already made, the Board says its next line of action is to find out how the new service might be designed to support a vast array of payment system stakeholders and it is now requesting comment from members of the public, to that effect.
If all goes as planned, the FedNow service will go live in 2023 or 2024.
Crypto Twitter Reacts
In reaction to the Fed’s plans to launch its own real-time payments system, Anthony Pompliano, co-founder of Morgan Creek Digital Assets tweeted:
Gabor Gurbacs, director of digital assets strategy at MV Index Solutions, a subsidiary of VanEck tweeted:
In related news, earlier in July 2018, Federal Reserve Chairman, Jerome Powell made it clear that bitcoin and other cryptos do not represent a significant threat to the apex bank, neither is the Fed’s looking to adopt the nascent tech.