FedNow Is Here, and The Federal Reserve Says It’s Not a CBDC (But It Would Make One Easier To Implement)

The Federal Reserve has asserted that the FedNow Service, its latest instant payment offering for organizations, is unrelated to the concept of central bank digital currencies (CBDCs). The new service is expected to revolutionize the payment landscape by offering real-time gross settlement (RTGS), a departure from traditional methods, which can take up to a few days. Yet, while FedNow isn’t a CBDC and isn’t yet tied to one, it certainly makes implementing a future CBDC much easier – and that’s why critics are skeptical. The central bank has brought on board a mix of 41 financial institutions, 15 service providers, and the US Department of the Treasury to fine-tune the FedNow Service before its roll-out slated for late July 2023. As expressed on social media, the Federal Reserve likened FedNow to existing payment services such as Fedwire and FedACH, indicating that they all operate within the fiat currency framework. In its statement, the Federal Reserve highlighted that “The FedNow Service is a payment service the Federal Reserve is making available for banks and credit unions to transfer funds for their customers” and emphasized its non-association with digital currencies. The lady doth protest too much methinks. Amidst speculation around the launch of a CBDC, the Federal Reserve reasserted its stance, stating it has yet to decide on the issuance of a CBDC and would only consider such a move if sanctioned by law. Though a comprehensive list of initial participants is already in place, the Federal Reserve has a forward-looking plan…FedNow Is Here, and The Federal Reserve Says It’s Not a CBDC (But It Would Make One Easier To Implement)