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| US Fednow Payment System Launching in July, But Economist Suspects it's a Prelude to a CBDC |
The US Federal Reserve has announced that its Fednow payment service will be operational from July this year, with certification available from April for those who wish to participate in the Pilot Program. Financial institutions of all sizes, major processors and the US Treasury are among the entities preparing to use the system, which will facilitate instant payments and settlements around the clock, every day of the year, via the Fedline Network. The aim of the Fednow program is to make money management more flexible for its participants, according to the Federal Reserve.
While the launch has been welcomed by many, economist Richard Werner has raised suspicions over the timing of the rollout, suggesting it could be a precursor to a central bank digital currency (CBDC). Werner warned that the introduction of a CBDC could lead to a form of “totalitarian control” by central banks and the removal of alternatives, including cash. He argued that once the funds were placed in a central bank and CBDC issued, the government would legally own the money, with claimants subject to a number of conditions.
Werner’s comments came as Florida governor Ron DeSantis proposed legislation to block the launch of a CBDC in the state. President Biden’s economic report, meanwhile, highlighted that once the Fednow program was in place, alternatives to fiat currencies would no longer be necessary. At present, 114 countries are working on CBDC research and development, with 11, including China, Nigeria and Venezuela, having implemented such systems.
