U.S. Federal Reserve confirms launch date for instant payments system

U.S. Federal Reserve has made headlines around the world upon confirming the launch date for their instant payments system in July

Tecnología March 16
News Mundocrypto

The United States Federal Reserve has announced that its much-anticipated instant payments system will be launched in July. The system is expected to offer a viable alternative to central bank digital currencies and stablecoins, settling payments in seconds between consumers, merchants, and banks. Unlike other instant payment networks, the FedNow service does not rely on blockchain technology.

According to the announcement made on March 15, the U.S. Treasury and a “diverse mix of financial institutions of all sizes” will be ready to use the network from launch. The Fed plans to onboard as many financial institutions as possible after the launch in order to increase the availability of instant payments.

The FedNow system was first announced in 2019 and will provide round-the-clock, real-time gross settlement by using commercial bank money to transfer funds between senders and recipients. The system also has built-in features such as fraud risk management.

Some experts see the FedNow service as addressing a problem that both stablecoins and CBDCs also seek to solve. However, FedNow does not use blockchain tech, while the Federal Reserve has expressed a cautious and skeptical view on stablecoins.

The launch of FedNow comes at a time when one of the major banking payment rails serving U.S. crypto companies in the Silvergate Exchange Network (SEN) was shut down following Silvergate’s collapse. The future of SEN competitor SigNet from Signature Bank is also uncertain following the bank’s forced closure.

FedNow could also potentially stand in place of a central-bank-issued digital currency, which is expected to take far longer to get off the ground than FedNow due to regulatory hurdles. Some experts believe that FedNow will serve many of the same functions as a CBDC.

Federal Reserve Vice Chair Lael Brainard emphasized during a House of Representatives Committee on Financial Services hearing in May that FedNow will serve many of the same functions as a CBDC. Fed chair Jerome Powell also stated that “we’ll have real-time payments in this country very, very soon.”