According to the U.S. Federal Reserve, the central bank’s Fednow payment service will start operating in July, and participants will be certified in April to leverage the Fednow Pilot Program. Ken Montgomery, the Fednow program executive, is urging American financial institutions to make preparations to join the central bank’s new payment service. Economist Richard Werner, however, believes the timing of the Fednow rollout is “suspicious,” and he suggests that “maybe it’s all about rolling out” a central bank digital currency (CBDC).
Fednow Payment Service Prepares to Facilitate Instant Payments, Economist Suggests Launch Could Lead to a CBDC
The U.S. central bank is preparing to launch the Fednow payment service, and the Fed explains in a recently published blog post that there have been many interested candidates that want to utilize the service. The Fed details that entities planning to use the Fednow program in July include a “diverse mix of financial institutions of all sizes, the largest processors, and the U.S. Treasury.” According to Fednow program executive sponsor Tom Barkin, the president of the Federal Reserve Bank of Richmond, the launch is an “important milestone” for “instant payments.”
The Fednow system is allegedly able to facilitate payments and settlements instantly, “regardless of size or geographic location — around the clock, every day of the year.” With access to funds immediately, participants can manage their money in a more flexible fashion, according to the Fednow description. Access to the Fednow system will be granted via the Fedline Network, which already serves roughly 10,000 financial institutions and agents. “The Fednow Service will launch with a robust set of core clearing and settlement functionality and value-added features,” the announcement from the Federal Reserve explains.
Although, not everyone is excited about the central bank’s plans to enhance payments, as Florida governor Ron DeSantis recently revealed legislation that blocks a CBDC in the state of Florida. Speaking about the Fednow program, economist Richard Werner told Michelle Makori, the lead anchor and editor-in-chief at Kitco News, that the timing is “suspicious.” The Fednow rollout could pave the way toward surveillance capitalism and usher in a CBDC.
“The timing is suspicious,” Werner said to Makori during his interview. “Why do they roll this out now? The banking system has done its job well, in…
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