Market News- FedNow, an instant payment service is releasing this July.
- Activating anytime payment process, undertaken by Federal Reserve.
FedNow is an initiative of the Federal Reserve Bank for a new, enriched payment service. The announcement is about launching this payment service in the upcoming July 2023. It is one of several services of the Federal Reserve, including FedWire, a credit transfer service, and FedACH, an automated clearing house.
As the Federal Reserve’s report says, FedNow will allow users and businesses in the United States to make instant payments. Using their accounts at depository institutions like banks and organizations that enable security. However, FedNow is a service that isn’t considered any type of currency or some payment service overpowering other existing services.
What is FedNow Service?
As per the recommendation of the U.S. Treasury to build a 24x7x365 settlement service, the Federal Reserve announced the FedNow service supporting instant payment systems in an innovative and effective way.
Instant payment is something that activates payments and transactions within seconds, irrespective of the time being in a year. This also enables the receiver to utilize the amount sooner they receive. Meanwhile, FedNow is not associated with Central Bank Digital Currency (CBDC) by any chance.
Also, if the Federal Reserve is obliged to issue CBDC in the U.S., then it will be following the specific authorizing laws. Furthermore, Federal Reserve is conducting a critical analysis exploring the advantages and risks of issuing a CBDC.
It is obvious that FedNow might explore interoperability. In future terms, it is expected to work on message-based exchanges across the world with an active engagement of the private sectors that currently exist.
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Source: https://thenewscrypto.com/fednow-federal-reserves-instant-payment-service-in-the-us/