FedNow, the Federal Reserve’s alternative to blockchain and CBDCs, launches in July
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(Kitco News) – The Federal Reserve has officially announced that the launch of its FedNow service will take place in July following the formal certification of participants for the service, which is scheduled to begin in the first week of April.
FedNow was developed in an effort to create a platform that can provide instant payment services to financial institutions across the country, 24/7/365. Participation by financial institutions enables businesses and individuals to send and receive instant payments at any time of the day, giving recipients full access to funds immediately, allowing greater flexibility in money management.
Early adopters will be required to complete a customer testing and certification program that was developed from feedback received during the FedNow pilot program. The certification process will help prepare participants to begin sending direct transactions through the system.
The certification process includes “a comprehensive testing plan with defined expectations for operational readiness and network experience,” the announcement said.
In June, prior to the official launch of FedNow, the Federal Reserve and all certified participants will “conduct production validation activities to confirm that they are ready for the July launch.”
“We couldn’t be more excited about the upcoming FedNow launch, which will enable all participating financial institutions, small to large and from every corner of the country, to offer a modern instant payment solution,” said Ken Montgomery, First Vice President . president of the Federal Reserve Bank of Boston and FedNow host. “As the launch approaches, we encourage financial institutions and their industry partners to go full steam ahead with preparations to join the FedNow service.”
Numerous parties, “including a diverse mix of financial institutions of all sizes, the largest processors and the US Treasury Department,” have already signaled their intention to begin using the service in July, according to the Fed.
The central bank has now embarked on an adoption drive in an effort to get as many financial institutions and service providers to complete the testing and certification program and implement the service.
Montgomery indicated that expanding the network of participating providers is key to increasing the availability of instant payments for consumers and businesses across the country.
At launch, the FedNow service will include a “robust set of core clearing and settlement functionality and value-added features,” the announcement said. Additional features and enhancements will be added in the future as the FedNow network expands and usage increases.
“With the FedNow service, the Federal Reserve is creating a leading payments system that is resilient, adaptable and accessible,” said Tom Barkin, president of the Federal Reserve Bank of Richmond and the FedNow program’s executive sponsor. “The launch reflects an important milestone in the journey to help financial institutions serve their customers’ needs for instant payments to better support nearly every aspect of our economy.”
The Federal Reserve chose to develop FedNow as an alternative to a digital dollar or dollar-backed stablecoin. On Wednesday, blockchain operator Tassat announced that it will act as a business-to-business on-ramp for FedNow through a client-facing application programming interface (API). Both the company’s interbank and intrabank services will provide FedNow access.
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