and announcement On Thursday morning, the Federal Reserve announced that its instant payments system, the FedNow® Service, has officially gone live. The tool aims to make it easier for banks and credit unions of all sizes to make instant money transfers for their customers. The Fed claims that FedNow trades can be executed 24/7.
First, 35 banks and credit unions, along with the U.S. Treasury Office, are among the banks and credit unions already in place to process payments through the FedNow service. In addition, 16 service providers will provide payment processing support for banks and credit unions.
“The Federal Reserve built the FedNow service to make everyday payments faster and more convenient for years to come,” said Federal Reserve Chairman Jerome Powell. “Over time, as more banks choose to use this new tool, benefits for individuals and businesses will include immediate payroll for individuals and immediate access to funds for businesses when bills are paid.”
When asked if the FedNow service is about to replace cash and whether it is a central bank digital currency (CBDC), the Federal Reserve responded:said “No. The FedNow service has nothing to do with digital currency. The FedNow service is a payment service that the Federal Reserve makes available to banks and credit unions to transfer customer funds.Like other Federal Reserve payment services such as Fedwire and FedACH, the FedNow service is neither a form of currency nor a step toward eliminating all forms of payment, including cash.”