- Brainard urged US banks and software developers to prepare for the debut.
- The vice president said that the service’s use of cloud computing made that possible.
FedNow, the new payment facilitation system that powers Federal Reserve Plans to roll it out, may reduce the need for a central bank digital currency.
FedNow is scheduled to launch between May and July 2023. That’s according to the Fed’s vice chairman Lyle Brainard. Brainard also announced that in September this year, technical testing of the system will begin.
Alternative to CBDC
On August 29, the news was announced during an early adopter workshop in Rosemont, Illinois. At the event, Brainard urged US banks and software developers. It urged them to prepare for the start of the new service by implementing the necessary system updates.
The goal of the pilot program, FedNow Explorer, FedNow Community, and FedNow Early Adopter Workshop is to promote participation. With FedNow, US consumers, merchants and banks can access instant financial transactions, the Federal Reserve claims.
Brainard said the service’s use of cloud computing made it possible for the payment system to grow without compromising reliability. This scalability applies to both the throughput and the geographical scope of the system, ensuring availability even in less densely populated areas.
In the crypto community, FedNow stands out since it has been promoted as a viable alternative to Central Bank Digital Currency (CBDC) issued by a central bank. FedNow Governor Michelle Bowman said on August 17 that FedNow is “addressing the issues that some have raised about the need for CDBC.”
It will take at least five years to obtain congressional authorization to design and implement a CBDC, Brainard said. Thus, it is very likely that FedNow will be completed before any US CBDC initiatives are fully implemented.
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