Federal Reserve Is Rushing to Get Its Instant Payments Offering Ready

COVID-19 proved the need for FedNow, even though the U.S. central bank admits the service is still years away.

Aug 6, 2020 at 6:03 p.m. UTC
Updated Sep 14, 2021 at 9:41 a.m. UTC

The Federal Reserve is bullish on technologies that aim to speed payments, and is now rushing to get its own platform, FedNow, up and running.

  • In a Thursday webinar, Federal Reserve Board Governor Lael Brainard said the U.S. central bank will debut its instant payment service "as soon as practically possible."
  • COVID-19 showcased Americans' dire need of a "resilient instant payment system," Brainard said. FedNow aims to be the answer, even if it won't arrive until 2023 or 2024.
  • FedNow, which the Federal Reserve is developing in response to private-sector, real-time, gross settlement initiatives, may play a key part in that future.
  • "By creating that neutral platform, banks in partnership with these other companies will be able to offer much more innovation services, services that we may not even be imagining," Brainard said.
  • In the meantime, the Federal Reserve "remains optimistic" that emerging payment technologies could benefit consumers at the retail payments level "when the appropriate safeguards are in place," she said.
  • She also cited the impact of the Facebook-linked libra stablecoin, repeating her past assertion the global stablecoin project raises "fundamental questions" about private money regulation, legality and its potential economic implications.
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