Fed will develop its own payment network

The Board of Governors of the US Federal Reserve System (FRS) announced that the US central bank intends to develop its own payment and settlement network FedNow Service, which will allow any American bank to provide customers with round-the-clock and almost instant payments.

The Fed emphasized that the ability to send funds at any time of the day or week can significantly improve the economic situation of citizens and businesses. So, FedNow Service will become the infrastructure on top of which financial service providers will be able to develop their own payment solutions. Its launch should take place in 2023-2024.

In 2018, the Fed received 350 public comments from financial market participants, and 90% supported the initiative. Note, first of all, small banks are interested in developing such a network, since at the moment they are forced to use alternatives from large competitors.

Now the Fed has requested public comments in which market participants can express wishes for the FedNow Service device, but it is not yet known what technological solutions the central bank will use.

At the same time, the Fed is considering the possibility of round-the-clock operation of the Federal Automated Money Transfer System (Fedwire) and the National Settlement Service, which provide payments between credit and other financial organizations.

Recall, earlier, central bank chairman Jerome Powell said that people often use bitcoin as a speculative means of accumulating value like gold. He also agreed that a certain global cryptocurrency in theory could eliminate the need for reserve currencies.

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