US Federal Reserve Eyes Real-Time Payments


Four former Federal Reserve chiefs made a joint plea for the central bank to be able to operate without political pressures or the threat of removal of its leaders, responding to President Donald Trump's persistent attacks on current Chairman Jerome Powell.

In 2017, The Clearing House, a consortium of large banks, created its own real-time payments system.

Already, several banks are fighting the FED, which some lawmakers have joined, including Democratic Senators Elizabeth Warren and Chris Van Hollen.

The tweets also come just days after the four living former chairs of the Fed called for the USA central bank to remain free to work independently and without fear of political reprisals in a rare joint public statement.

Since its founding more than a century ago, the Federal Reserve has provided payment and settlement services, alongside and in cooperation with the private sector, as part of its core function of promoting an accessible, safe, and efficient US payment system. We will engage with the industry through groups and forums to finalize the design and features of the service.

The Federal Reserve Board on Monday announced that the Federal Reserve Banks will develop a new round-the-clock real-time payment and settlement service, called the FedNow℠ Service, to support faster payments in the United States.

The FedNow service is expected to become available in 2023/2024.

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The Fed is now requesting public comment on how to deliver the service after a public comment period in 2018, when the Board began kicking around the idea of a payment service.

While neither the federal government nor Ripple has officially confirmed that FedNow will use Ripple's network or even blockchain technology, Ripple's Global Head of Infrastructure Innovation, Dilip Rao, tweeted yesterday that the launch of the FedNow Service was a "great move". FIN has long argued to policymakers that sending money should be as fast and easy as sending a text message.

"FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers", Fed Board Governor Lael Brainard said in a statement.

The on-demand model is coming to payments and settlements. It hasn't directly admitted as much, but the fact that it wants to release a payments system to rival SWIFT and allow real-time settlements indicates it has a real concern over crypto's ability to revolutionize how money transactions are conducted. FIN looks forward to working with the Federal Reserve on a timely process that benefits all payment system users and stakeholders.

"The extended timeline sparked barbs that the central bank's service ... should instead be called 'Fed Five Years from Now, '" American Banker said.

FIN was a member of the Fed's Faster Payments Task Force, which provided recommendations to the Fed.