The U.S. Federal Reserve recently made an announcement regarding the launch of the Fednow project in July 2023. This project has quickly become a topic of conversation as people fear that it could be the first step to a Central Bank Digital Currency (CBDC). In order to address such concerns, the Fed issued an update on April 7, 2023, wherein it clarified that the Fednow service is neither a form of currency nor a step towards eliminating any form of payment, including cash.
The Fednow Service is basically a digital payment system designed to facilitate instant payments, similar to other Federal Reserve payment services like Fedwire and Fed ACH. It is also important to note that the Fednow Service is not a digital currency, as it is simply a payments service. Moreover, the Fed emphasized that a CBDC would not replace cash or other payment options; the Fednot has not made a decision on whether to issue a CBDC yet and will need authorization from the executive branch and congressional members to do so.
However, despite the Fed's statement, some experts continue to insist that the system is indeed a form of digital currency, and that the Fed's characterization of the project is misleading. One such expert is economist Richard Werner, who in a recent interview expressed skepticism over the timing of the Fednow project. Georgia Representative Marjorie Taylor Greene also spoke against the project and criticized it, expressing her concern about the risk of increased surveillance of Americans’ financial transactions.
In a bid to prevent the introduction of a CBDC or an excessive reliance on digital payment systems, some U.S. lawmakers have proposed legislation with the goal of prohibiting such initiatives. Nevertheless, the White House's "Economic Report of the President" has asserted that Fednow and CBDC initiatives have the potential to realize many of the benefits that crypto asset developers have promised. Ultimately, the exact nature of the Fednow service and its relationship to a potential CBDC remain topics of debate and require further inquiry.
Austin Bailey
- 2023-04-09
Exploring the Fednow Payment Service
This article looks at the U.S. Federal Reserve's recent announcement about their new payment system, Fednow, and its possible ties to a Central Bank Digital Currency. It discusses some experts' opinions on the service as well as the proposed legislation to prevent the introduction of a CBDC.
