- 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.
It is intended for the FedNow Service to go live between May and July 2023.. This is according to Vice Chair of the Federal Reserve Lael Brainard. Brainard also stated that the system will start to undergo technical testing in September of this year.
Alternative to CBDC
The data was made public on August 29th, just before a Rosemont, Illinois, Early Adopter Workshop that was live-streamed. 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.
Since it has been promoted as a participant to a central bank digital currency (CBDC) issued by a central bank, FedNow stands out in the crypto community. 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. Before any CBDC initiatives in the US are completely implemented, the FedNow project is still most probably to be finished.
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