The Federal Reserve has announced that the FedNow service will launch by mid-2023 to make faster payments more widely available in the US. This will take place through a government-backed payments system operating at all times, seven days a week, and 24 hours a day.

Such an instant payments system already exists in the form of the RTP Network, which is operated by the bank-owned The Clearing House, but that system has gained limited traction, partly because smaller banks are leery of larger rivals’ ownership. FedNow may enable financial institutions of every size, and in every community across America, to provide instant payment services. It is intended to be a flexible, neutral platform that will support a broad variety of instant payments.

Officials noted that FedNow is expected to bring more competition to the evolving real-time payments sphere. It will allow depository institutions and their service providers to offer value-added services to their customers, ultimately enhancing competition in the market for payment services. Looking at CBDC The Fed has also been mulling the possibility of a CBDC as another innovation that could make the US payments system more efficient and competitive with such digital currencies emerging in other countries.

Officials suggested that FedNow may bring some of the expected benefits of such a digital dollar. As part of the Fed’s assessment of the need for a CBDC, it solicited comments from the public. It received over 2,000 comments and is currently reviewing these comments and plan to publish a summary of them.

A brief review of the public docket for those comments shows a range of people responding to the agency’s questionnaire. They include individuals ranging from everyday consumers to university professors, and also organisations, such as the Institute of International Finance and the Securities Industry and Financial Markets Association, as well as companies. .