The Federal Reserve Board in the US announced a “new round-the-clock real-time payment and settlement service”, called FedNow. FedNow will be supported in the US to provide a safe and efficient system.
The Board of Governors of the Reserve not only decided to introduce a new system but also planned to re-design the existing system. It plans to improve liquidity management and provide 24X7X365 service with Fedwire as well.
The press release cited that the Reserve already serves over 10,000 financial institutions in the US. Moreover, it has provided payment and settlement services, since its founding about 100 years ago. It noted that,
That reach will help the FedNow Service support a nationwide infrastructure on which the financial services industry may develop innovative faster payment services for the benefit of all Americans.
The Federal Reserve plans to invest in this new system promote the integrity of the service and induce cost-effectiveness. It further plans “to achieve full recovery of costs over the long run.” The payment system will be released sometime during 2023-2014.
Furthermore, it also emphasized the importance of the new ‘liquidity management tool’ which will enable faster settlements. Lael Brainard, the Federal Reserve Board Governor, noted,
“FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.”
While Blockchain and crypto were not referenced to, this move surely seems to be influenced by the recent developments in the cryptocurrency space. Facebook’s Libra Senate Hearing went on for almost 10 hours on two days, where the two Senate Committees decided to put a stop to it.