Fresh Speculation Arises as US Federal Reserve Debuts FedNow Instant Payments Service
The US Federal Reserve recently unveiled the FedNow Service system to facilitate instant payments; however, experts warn that the system might become a precursor to the infrastructure for a central bank digital currency (CBDC).
Launched on Thursday, July 20, the FedNow service aims to enhance money movement in the US economy by offering various benefits to consumers and businesses. It will enable immediate access to paychecks, facilitate last-minute bill payments, and expedite government payments to individuals.
"The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient," said Federal Reserve Chair Jerome H. Powell.
"Over time, as more banks choose to use this new tool, the benefits to individuals and businesses will include enabling a person to immediately receive a paycheck or a company to instantly access funds when an invoice is paid."
While this may seem like a positive step as it aligns with a crucial goal of the digital asset industry - enabling fast and accessible money transfers at any time.
Crypto enthusiasts believe it is another way for the government to lay the structure for government-issued CBDCs.
"This is a payment system, not a digital token or a CBDC, but it is something that can be used to facilitate the creation of a CBDC," said Jim Bianco, president of Bianco Research.
However, the Fed denied the notion that FedNow is tied to an underlying intent in the July 10 FAQs.
Although the United States has yet to adopt any central bank digital currencies (CBDCs), various initiatives, including the New York Federal Reserve's 12-week program to test a simulated digital dollar, have been explored in the government's interest in digital currency.
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