Remember how you finally convinced your grandfather to ditch the Walkman in favour of the iPod, well that’s what the finance sector has done with the US Federal Reserve. The Federal Reserve Board is planning to release a real-time payments and settlements service in order to ease out the entire process in the absence of a better (*coughs* blockchain? *coughs*) system.
A press release published on Aug. 5 reads that the Board of Governors of the Federal Reserve System has requested Federal Reserve Banks to develop a new interbank real-time settlement service to support faster payments in the U.S. The payment system is called FedNow (they totally missed the opportunity to call it FedUp) and will purportedly launch in 2023 or 2024.
By launching FedNow, the Fed aims to modernize the country’s payment system to function on workdays as well as weekends, for business people and the general public alike. The Fed believes that such a system will allow its users to make more time-sensitive investments and is currently welcoming comments on the new service. Commenting on the issue, Federal Reserve Board Governor Lael Brainard said:
“Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community. FedNow will permit banks of every size in every community across the country to provide real-time payments to their customers.”
Some members of the cryptocurrency community, unsurprisingly, are nonplussed by the Fed’s plans to launch its own real-time payment system. Anthony Pompliano — co-founder of crypto asset management firm Morgan Creek Digital Assets — tweeted, “Bitcoin is already available.” It’s quite evident now that the Fed loves redundancy.
Others were more diplomatic or cautious with their response. Gabor Gurbacs, director of digital assets strategy at MV Index Solutions, a subsidiary of investment management firm VanEck, tweeted:
“Great that the @federalreserve is taking a forward looking and intelligent stance regarding innovation in #DigitalAssets and #payments. I recommend considering the benefits of #Bitcoin, a functioning, reliable, trust-minimized base-layer for sound money.”
Other crypto-related companies are going to make a contribution to the project. In June, Ripple Labs shook hands with the devil as they were elected to the Federal Reserve’s Faster Payments Task Force Steering Committee. The initiative intends to build a “fast, safe and ubiquitous payments network in the U.S.”
The Federal Reserve cut interest rates last week, a move which some experts say could be partially responsible for Bitcoin’s (BTC) recent price rally. Fundstrat Global Advisors co-founder Tom Lee said:
“Bitcoin’s becoming increasingly a macrohedge for investors against things that could go wrong. Rate cuts are adding liquidity. Liquidity is pushing money into all these risk assets and also hedges, which is helping Bitcoin.”