The United States Federal Reserve has confirmed that it will launch its instant payment system, FedNow, in July.
This move is a significant step for the government and is seen as an alternative to central bank digital currencies and stablecoins.
FedNow will settle payments in seconds and can support transactions between consumers, merchants, and banks, without relying on blockchain technology.
The instant payment network is controlled by the Federal Reserve Bank, rather than Clearing House’s RTP network, which is operated by a consortium of large banks.
The Fed aims to onboard as many financial institutions as possible to increase the availability of instant payments.
While some see the FedNow service as tackling a problem that both stablecoins and CBDCs seek to solve, it does not use blockchain technology, and the Federal Reserve is known to have a cautious and skeptical view on stablecoins.
@federalreserve @frbservices announce July launch for the FedNow Service: https://t.co/a7kPqxkS7Q
— Federal Reserve (@federalreserve) March 15, 2023
FedNow could also potentially stand in place of a central-bank-issued digital currency, as it will serve many of the same functions as a CBDC.
“With the FedNow Service, the Federal Reserve is creating a leading-edge payments system that is resilient, adaptive, and accessible,” said Tom Barkin, president of the Federal Reserve Bank of Richmond and FedNow Program executive sponsor. “The launch reflects an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of our economy.”
