FedNow will be launched in July

• The long-awaited Federal Reserve network for instant payments, FedNow, is set to launch in July.

• This announcement comes after some crypto firms were sued by authorities for listing unregistered securities, and crypto-friendly banks appeared to be targeted.

FedNow, the long-awaited payment system of the Federal Reserve, is reported will be launched in July. The payment will be instant and has been designed to support consumer-to-consumer, consumer-to-merchant, merchant-to-seller and bank-to-bank transactions.

According to the Fed, several banks of various sizes, including the US Treasury Department and the largest processors, are on board. From April, interested financial institutions can start certification to participate in the service. According to feedback from the FedNow Pilot Program, early adopters will be required to conduct customer testing. This is to ensure that there are enough preparations to send live transactions via the system.

Ken Montgomery, First Vice President of the Federal Reserve Bank of Boston and FedNow Program Chair expressed his excitement at this milestone.

We couldn’t be more excited about the upcoming FedNow launch, which will enable all participating financial institutions, the smallest to the largest and from all corners of the country, to offer a modern instant payment solution.

The central bank has also explained that the FedNow service would allow financial institutions to process payments every day and at any time, and would not be limited to banking hours. According to Montgomery, the availability of the service is just the beginning. In his statement, Montgomery noted that expanding the network of participating financial institutions is a critical point in increasing the availability of instant payments for all stakeholders.

FedNow can help banks offer better customer service

Tom Barkin, president of the Federal Reserve Bank of Richmond and executive sponsor of the FedNow program, said in a statement that this initiative is a major step in enabling financial institutions to better serve their customers.

With the FedNow service, the Federal Reserve is creating a leading payments system that is resilient, adaptable and accessible. The launch reflects an important milestone in the journey to help financial institutions serve their customers’ needs for instant payments to better support nearly every aspect of our economy.

The instant nature of the payments network is said to be a big relief for Americans living paycheck to paycheck and small businesses to avoid late payment fees that limit cash flow. Analysts have also observed that since consumers don’t have to wait for checks to clear, FedNow could cut demand for payday loans. Business will also be conducted smoothly as suppliers will be paid on time. According to Fed Governor Michelle Bowman, FedNow could offer some of the benefits of Central Bank Digital Currency (CBDC).

My expectation is that FedNow addresses the issues that some have raised about the need for a CBDC. As I’m sure you’re already aware, earlier this year we published a discussion paper outlining some design principles, costs and benefits of a CBDC and solicited public comments.5 We received over 2,000 comments, and we’re currently reviewing those comments and plans to publish a summary of them.

No spam, no lies, just insight. You can unsubscribe at any time.

This announcement comes weeks after some crypto firms were targeted by attacks in the United States. Ripple-pro lawyer John Deaton suspects that these coordinated attacks are politically and financially motivated. Some crypto enthusiasts have speculated that the recent attack on the crypto ecosystem could be designed to pave the way for FedNow and eventually a CBDC.

Crypto News Flash does not endorse and is not responsible or liable for the content, accuracy, quality, advertising, products or other materials on this site. Readers should do their own research before taking any action related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damages or losses caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned.