The Federal Reserve Rolls Out FedNow, A New Payment System
FedNow, a new payment facilitation system which might mitigate the need for a CBDC (Central Bank Digital Currency), is reportedly being prepared for launch by the Federal Reserve.
FedNow is hence an instant payment method that allows for real-time transactions between U.S-based households, businesses, and financial institutions.
The service is built with cloud technology, which enables the payment system to scale without sacrificing resilience. This scalability applies to both the systems throughput and geographic coverage, ensuring continuous service even in highly remote areas.
The FedNow Service is scheduled to go live between May and July 2023, according to Lael Brainard, Federal Reserve Vice Chair. Brainard also stated that the system would begin technical testing this September.
Brainard has therefore urged financial institutions and software providers in the United States to update their systems ahead of time. He also claims that the transition to real-time payment infrastructure will require concentrated effort but is nevertheless unavoidable, and that the time is now for everyone to devote all necessary resources to make this inevitable transition both seamless and effective.
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