Brainard urged U.S. banks and software developers to prepare for the debut.
The Vice-chair said the service’s use of cloud computing made it possible.
FedNow, a new payment facilitation system that the Federal Reserve plans to roll out, may reduce the need for a central bank digital currency.
The FedNow Service is scheduled to launch between May and July 2023. This is according to Vice Chair of the Federal Reserve Lael Brainard. It was also announced by Brainard that in September of this year, technical testing of the system will commence.
Alternative to CBDC
On August 29th, during a streamed Early Adopter Workshop in Rosemont, Illinois, the news was announced. At the event, Brainard urged U.S. banks and software developers. She urged them to prepare for the debut of the new service by implementing necessary system updates.
The goal of the pilot program, FedNow Explorer, the FedNow Community, and the FedNow Early Adopter Workshop is to boost participation. With FedNow, consumers, merchants, and banks in the United States have access to instantaneous financial transactions, as claimed by the Federal Reserve.
Brainard said the service’s use of cloud computing made it possible for the payment system to grow without compromising reliability. This scalability applies to both the throughput and the geographical reach of the system, guaranteeing availability even in less-populated areas.
In the crypto community, FedNow stands out since it has been promoted as a viable alternative to a central bank digital currency (CBDC) issued by a central bank. FedNow “addresses the issues that some have raised about the need for a CDBC,” Governor Michelle Bowman of the Federal Reserve said on August 17.
Brainard has said that getting permission from Congress and designing and implementing a CBDC would take at least five years. Thus, it’s quite likely that FedNow will be finished before any CBDC initiatives in the United States are fully implemented.