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| US Federal Reserve Announces Launch of FedNow Payment System in July |
FED has announced the launch of its FedNow Instant Payment system in July, offering the fastest funds moment between citizens and financial services providers. The system will offer a viable and government-backed payment solution to serve everyone, providing a solution to the cost and speed of settlements that has long been a problem in the banking and payment ecosystem. The system will still be controlled by the Federal Reserve, but will serve as the government's solution to both stablecoins and Central Bank Digital Currencies (CBDCs). The vetting process for formal certification of participants will start in April, with the certified participants conducting production validation activities to confirm readiness for the July launch.
The FedNow payment system is pushing back the need for a digital dollar, according to the Federal Reserve. Federal Reserve Vice Chairman Lael Brainard has emphasized that the Digital Dollar will take much longer to get off the ground than the FedNow system due to regulatory hurdles surrounding it. The bulk of the work involving the Digital Dollar is speculative for now, with the Federal Reserve experimenting in early-stage experimentation. Federal Reserve Chairman Jerome Powell has stated that the FedNow payment system will suffice for now, with the Federal Reserve providing a viable and government-backed payment solution to serve everyone.
The Federal Reserve Bank of Boston and FedNow program executive Ken Montgomery has urged financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service. With the launch drawing near, certified participants will conduct production validation activities to confirm readiness for the July launch. The system has to be working optimally in terms of both the payment and transaction systems as well as all security features to prevent any form of glitch.
The FedNow payment system will offer the smallest to the largest financial institutions, from all corners of the country, a modern instant payment solution. According to the Federal Reserve, it is excited about the forthcoming launch, which will enable every participating financial institution to offer a modern instant payment solution.
