Federal Reserve to create FedNow real-time payment and settlement service

Federal Reserve to create FedNow real-time payment and settlement service

In addition, the Board is announcing its intention to explore the expansion of Fedwire Funds Service and National Settlement Service hours, up to 24x7x365, to facilitate liquidity management in private-sector real-time gross settlement services for faster payments and to support a wide range of payment activities, beyond those related to faster payments. While the new project has shocked some in the crypto community, the Ripple community seems to be thrilled about the new settlement service. The FedNow Service, slated to go live by 2023 or 2024, will modernize the payments infrastructure and provide businesses more flexibility in managing money and making time-sensitive payments.

Those banks, which have already invested $1 billion into an instant payment platform that launched in 2017, say they built their system under the assumption that the Fed would not build its own. Members include Bank of America, JPMorgan Chase and US Bank, among others.

Arlington, Va. -based FMI collaborated with the Fed to pinpoint the challenges and opportunities in the US payments ecosystem, including the potential of real-time gross settlements (RTGS).

The organization has more good news incoming, as the payments company MoneyGram recently revealed that it was piloting Ripple's xCurrent network and XRP for cross-border transactions.

The Board of Governors of the Federal Reserve System wants public comment (within three months) on "how the new service might be created to most effectively support the full set of payment system stakeholders and the functioning of the broader USA payment system".

"We are united in the conviction that the Fed and its chair must be permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion of Fed leaders for political reasons", Janet Yellen, Ben Bernanke, Alan Greenspan and Paul Volcker said in an op-ed in the Wall Street Journal. These delays cause stress, an over-reliance on credit, and higher fees paid by individuals and merchants.

Brainard said 90 percent of the comments it received supported a Fed system. "FedNow will allow financial institutions of all sizes in all communities across the U.S.to offer real-time payments to their customers".

President Trump pointed to interest rate cuts by three foreign central banks Wednesday as proof that the Federal Reserve's monetary policy, not his trade war with China, is the cause of "our problem". And in October, it solicited public comment on building its own real-time payments system.

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