The Federal Reserve of the United States has announced plans to develop a public payment system for banks to exchange money, providing an alternative to private payment systems currently being built and maintained by big banks.
In a press release on August 5th, The Federal Reserve stated their intention to provide a “round-the-clock” and “real-time” service, to be known as FedNow. This announcement comes just after the Federal Reserve cut interest rates for the first time in Bitcoin’s existence, with analysts hopeful with regards to the effect on crypto.
The press release then goes into detail on the history of the Federal Reserve, and how its wide reach and instrumental presence in current banking infrastructure would make it an ideal provider of quick public payment processing.
Federal Reserve Governor Lael Brainard commented on the accessibility of the Reserve’s new project:
Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community. FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.
The press release also emphasized the role public participation played in the decision behind the FedNow service, stating that the original idea came from a call for public comment in the previous year:
In 2018, the Board requested public comment on potential services that could be developed by the Federal Reserve to support faster payments. Of the more than 350 comments that took a position on whether the Federal Reserve should develop a new service for faster payments, over 90 percent supported the Federal Reserve operating a round-the-clock real-time payment and settlement service alongside services provided by the private sector.
Maintaining the pledge of public involvement, the statement went on to request further comment in order to hone the new payment system before release:
The Board is now requesting comment on how the new service might be designed to most effectively support the full set of payment system stakeholders and the functioning of the broader U.S. payment system. The Board anticipates the FedNow Service will be available in 2023 or 2024.
The Federal Reserve Board also announced its intention to expand the hours of Fedwire Funds Service and the National Settlement Service, up to an optimal 24/7/365.